MAG Petroleum is an SME specialising in the sale of lubricants for industrial use. The company, which
Question:
MAG Petroleum is an SME specialising in the sale of lubricants for industrial use. The company, which is owned and operated by Angelina, has just completed its third year operation. During this time, Angelina has sought to establish a reputation for the company as a supplier of high quality lubricants. The efforts made by Angelina and her staff have proved successful, and her company has become one of the best and fastest growing privately owned company in Zambia.
Angelina has concluded that in order to plan better for the growth of the company in the future, it is necessary to develop assistance that will enable her to forecast lubricant sales by month for up to one year in advance. Angelina has available data on the total lubricant sales that were realized during the previous three years of operation. These data are provided in Table 1.
Analyse the sales data for MAG Petroleum by performing the following:
1. Using Excel or any other software, draw a graph of the time series and comment on the data patterns present if any.
2. Calculate the seasonal index (to 3 decimal points) for each month.
3. Forecast sales for January through December of the fourth year (make the forecasts to 3 decimal points).
4. Assume that January sales for the fourth year turned out to be $ 290,000. What was your forecast error? Comment.
5. Recommend when the system that you have developed should be updated to account for new sales data that will occur. Assume you have a computer software package.
Table 1: Lubricant Sales for MAG PETROLEUM ($1000s)
Month First Year Second Year Third Year
January 242 263 282
February 235 238 255
March 232 247 265
April 178 193 205
May 184 193 210
June 140 149 160
July 145 157 166
August 152 161 174
September 110 122 126
October 130 130 148
November 152 167 173
December 206 230 235
Operations and Supply Chain Management
ISBN: 978-0078024023
14th edition
Authors: F. Robert Jacobs, Richard Chase