1.1 Read the scenario below and answer the question that follows:

One of an operations managers main responsibilities is to balance supply and demand. Forecasting must therefore be carried out to predict demand. The procurement (buying) department must ensure that there is enough stock (or capacity) available to satisfy customers. When stock-out occurs, customers will turn to the competition for supply and may never return.

Required: Develop a strategic forecasting and inventory plan for a retail company to ensure that stock-outs are minimised and customers are well serviced. The company sells fast moving consumer goods to lower income groups. The company turnover is R16 million per month, on average, and there are five staff members in the procurement department. (15)