Question $1(6$ marks$)$

Cameron Kerr's Manufacturing

Cameron Kerr is the CEO of Kerr's Manufacturing, a company that makes

various components for its broadband technology division. In all, the company makes

about $200$ different items. The two markets $($the major manufacturer and replacement

market$)$ require somewhat different handling. For example, replacement products must

be packaged individually whereas products are shipped in bulk to the major

manufacturer.

The company does not use forecasts for production planning. Instead, the

operations manager decides which items to produce, and the batch size, based partly on

orders, and the amounts in inventory. The products that have the fewest amounts in

inventory get the highest priority. Demand is uneven and the company has experienced

being overstocked on some items and out of stock on others. Being understocked has

occasionally created tensions with the manger of retail outlets. Another problem is that

prices of raw materials have been creeping up$,$ although the operations manager thinks

that this might be a temporary condition.

Because of competitive pressures and falling profits, Cameron has asked the

Operations Manager to undertake several changes. One change is to introduce more

formal forecasting procedures to improve production planning and inventory

management. With that in mind, the manager wants to begin forecasting for two

products. These products are important for several reasons. First, they account for a

disproportionately large share of the company's profits. Second, the manager believes

that one of these products will become increasingly important to future growth plans; and

third, the other product has experienced periodic out$-$of$-$stock instances. The manager

has compiled data on product demand for the two products from order records for the

previous $14$ weeks. These are shown in the following table:

Questions:

What are some of the potential benefits of a more formalized approach to

forecasting? List at least $5$ benefits.

Above are the actual values for weeks $1$ through $14$ for Product $1$ and Product $2.$

Your job now is to do the following:

a$.$ Prepare a weekly forecast for weeks $15$ through $18$ for each of Product $1$ and

Product $2.$ How will you do this? First you must plot the data for the first $14$