Question 2: True or False Questions (3 Marks, 0.5 Mark each)

For each of the following statements write T if it is true and F if it is false:

1. One of the dimensions in which manufacturing processes change materials is pricing.
2. In inventory management, the carrying cost is the cost of temporary or permanent loss of sales when demand cannot be met.
3. Moving Average is a forecasting method used when demand is stable with no trend or seasonal pattern.
4. A value of the correlation coefficient between X and Y close to 1 indicates that there is a strong increasing linear relationship between X and Y.
5. In demand behavior forecasting, a gradual long-term up or down movement is called a trend.
6. In Periodic inventory control systems, a constant amount is ordered when the inventory declines to predetermined level.

Question 3: Problem solving (14 Marks)

The historical data below is on the monthly demand on a product in number of units:

Period	1	2	3	4	5	6
Month	Jan.	Feb.	Mar.	Apr.	May	Jun.
Demand	45	65	52	81	68	88

1. Compute the Demand forecast for the month of July using the moving average of order 3. Compute the whole MA series (show computation for July). (2 Marks)
2. Compute the Demand forecast for the month of July using the weighted moving average of order 3, the weights from the most recent month are: 60%, 30%, and 10%. Compute the whole WMA series (show computation for July). (2 Marks)
3. Compute the Demand forecast for the month of July using the exponential smoothing with = 0.3, assuming that F₁ = 50 units (show computation for July). (4 Marks)
4. Calculate the tracking signal TS for exponential smoothing and plot it (show computation for March). Based on the plot, is the ES forecast in control? Explain why. (6 Marks)