QUESTION $4$

$(20$ Marks$)$

Based on the information provided below, answer the following questions.

The demand planner at Radasys Enterprises $($ RE $)$ is dedicated to enhancing forecasting precision to better align inventory management with market demand. To this end, he is undertaking a comparative analysis of two candidate forecasting techniques: the Simple Exponential Smoothing method and the Moving Average method. This evaluation aims to determine which method delivers superior accuracy, thereby supporting improved inventory management, optimising resource allocation, and enhancing overall operational efficiency.

The sales data presented in the table below was extracted from RE's database for the evaluation exercise.

$\backslash$table$[[$Year$,$Quarter,Sales, R$],[2020,$Q$1,300000],[,$Q$2,350000],[,$Q$3,480000],[,$Q$4,420000],[2021,$Q$1,330000],[,$Q$2,390000],[,$Q$3,540000],[,$Q$4,480000],[2022,$Q$1,360000],[,$Q$2,450000],[,$Q$3,600000],[,$Q$4,540000],[2023,$Q$1,390000],[,$Q$2,480000],[,$Q$3,720000],[,$Q$4,600000]]$

REQUIRED:

$4\mathrm{.}1.$Discuss any three $(3)$ strategic importance of demand forecasting in supply chain and operations management.

$4\mathrm{.}2.$ Using the quarterly sales data extracted by the demand planner, prepare the $3-$quarter movingaverage $(3$QMA$)$ forecast for each of the fourteen quarters spanning from Q$42020$ to Q$12024.$ Ensure that your calculations are clearly presented in a table, with all forecast values displayed.

$4\mathrm{.}3.$Using the quarterly sales data extracted by the demand planner, prepare the simple exponential smoothing $($SES$)$ forecast for each of the sixteen quarters spanning from Q$22020$ to Q$12024.$ Assume

$(4$ Marks$)$

that the forecast for Q$12020$ is R$300000$ and use a smoothing constant $($a$)$ of $0\mathrm{.}5.$ Ensure that your calculations are clearly presented in a table, with all forecast values displayed.

$4\mathrm{.}4.$Calculate the Mean Absolute Percentage Error $($MAPE$)$ for both the $3$QMA and SES forecasts over the thirteen quarters from Q$42020$ to Q$42023.$ Show the detailed calculations for obtaining the MAPE

$(4$ Marks$)$

values and round off answers to two decimal places.

$4\mathrm{.}5.$ Based on the results obtained in question $4\mathrm{.}4,$ which of the candidate forecasting methods should be selected by the demand planner?

$(2$ Marks$)$