QUESTION 3 (20 Marks) PM Computer Services assembles customized personal computers from generic parts. Formed and operated by part-time State University students Paulette Tyler and Maureen Becker, the company has had steady growth since it started. The company assembles computers mostly at night, using part-time students. Paulette and Maureen purchase generic computer parts in volume at a discount from a variety of sources whenever they see a good deal. Thus, they need a good forecast of demand for their computers so that they will know how many computer component parts to purchase and stock. The company has accumulated the demand data shown in the accompanying table for its computers for the past twelve months, from which it wants to consider exponential smoothing forecasts using smoothing constants equal to 0.30 and 0.50.

Table of demand for personal computers

PERIOD MONTH DEMAND PERIOD MONTH DEMAND 1 January 37 7 July 43 2 February 40 8 August 47 3 March 41 9 September 56 4 April 37 10 October 52 5 May 45 11 November 55 6 June 50 12 December 54

3.1 Compute the 12-month series of forecasts for the data in this table using both the 0.30 and 0.50 smoothing constants. (12 marks)

3.2 The Managing Director of PM Computer Services, Mr. Mbeki, has requested you to evaluate the results obtained in question 3.1, and thereafter provide an analysis of the results on how it will influence the business. (8 marks)