Question $3-[22$ Marks$]$

$($i$)$ Discuss the strategic importance of forecasting to the different areas of operations in an organisation.

$[6]$

$($ii$)$ The table below shows demand for two products, A and B $,$ for previous ten $(10)$ months.

$\backslash$table$[[$Months$,$Product A$,$Product B$],[$January$,30,40],[$February$,25,25],[$March$,40,25],[$April$,50,30],[$May$,25,50],[$June$,35,45],[$July$,60,50],[$August$,20,35],[$September$,30,50],[$October$,50,25]]$

$($a$)$ Using a $3-$month weighted moving average compute the forecasts for April to October for products A and B $,$ using weights of $0\mathrm{.}5$ to the most recent data, $0\mathrm{.}3$ to the second most recent data and $0\mathrm{.}2$ to the third recent data.

$[5]$

$($b$)$ Using exponential smoothing with $=0\mathrm{.}2,$ compute the forecast for February to July for product B$,$ assuming a forecast of $50$ for January.

$[3]$

$($c$)$ Calculate the Mean Absolute Deviation $($MAD$)$ of the forecast method used in $($b$).$

$[3]$

$($d$)$ Prepare a monthly forecast for the next two months for product A using the linear regression model. On a well labeled graph draw the regression line for the months September to December.

$[5]$