Question

The following table represents 2018 sales figures for Mthembu’s Motors, a car dealership situated in Durban: Jan 45 Feb 125 Mar 20 Apr 150 May 12 June 16 July 130 August 25 Sept 33 Oct 160 Nov 48 Dec 37 Jan 2019

2.1 Using the data in the table above, calculate the 3-period moving average.

2.2 Business forecasts are used to predict sales, profits, costs, prices, interest rates, and other variables. In most organisations, the responsibility for preparing the demand forecasts lies with the marketing or sales department, rather than operations. Forecasts are an estimate of demand until actual demand becomes known. Forecasts of demand, therefore, impact upon several areas of operations.

Discuss the impact of the sales forecast on:

2.2.1 Human Resources

2.2.2 Capacity

2.2.3 Supply Chain

Answer 1

2.1

The three period moving average is calculated as

Average for period N = Sum of values for N-1, N-2, N3 divided by 3

The calculated values are shown below

Month	Value	3MA
Jan	45
Feb	125
Mar	20
Apr	150	63.33333333
May	12	98.33333333
Jun	16	60.66666667
Jul	130	59.33333333
Aug	25	52.66666667
Sep	33	57
Oct	160	62.66666667
Nov	48	72.66666667
Dec	37	80.33333333
Jan	2019	81.66666667
Feb		701.3333333

2.2

2.2.1

Human resources needs are dependent on the demand of the market. In a manufacturing setup, this can be labor requirement, in an corporate structure it can be a more long term approach to the employee needs and so on.

2.2.2

The capacity of the plant can be related not only human resources but also machinery. For example every factory, technology, assembly line, etc. has a ceiling of capacity. Even under ideal situations the companies usually cannot exceed the effective capacity. Thus, the organization needs to make sure that they keep a close eye on forecast so that they can increase the capacity when required.

2.2.3

Whenever demand increases, the pressure on supply chain increases. Thus forecasting of sales values can allow organizations to prepare and make arrangement for accomodate the extra demand and handle the pressure of the supply chain.