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MAG Petroleum

MAG Petroleum is an SME specialising in the sale of lubricants for industrial use. The company,which is owned and operated by Angelina, has just completed its third year operation. During this time, Angelina has sought to establish a reputation for the company as a supplier of high quality lubricants. The efforts made by Angelina and her staff have proved successful, and her company has become one of the best and fastest growing privately owned company in Zambia.

Angelina has concluded that in order to plan better for the growth of the company in the future, itis necessary to develop assistance that will enable her to forecast lubricant sales by month for up toone year in advance. Angelina has available data on the total lubricant sales that were realized during the previous three years of operation. These data are provided in Table 1. Analyse the sales data for MAG Petroleum by performing the following:

1. Draw a graph of the time series (comment on the data pattern).

2. Calculate the seasonal index (to 3 decimal points) for each month.

3. Forecast sales for January through December of the fourth year (make the forecasts to 3 decimal points).

4. Assume that January sales for the fourth year turned out to be $ 290,000. What was your forecast error? Comment.

5. Recommend when the system that you have developed should be updated to account for new sales data that will occur. Assume you have a computer software package.

Table 1: Lubricant Sales for MAG PETROLEUM ($1000s)Month First Year Second Year Third Year January 242263282 February 235238255 march 232247265 April 178193205 May 184193210 June 140149160 July 145157166 August 152161174 September 110122126 October 130130148 November 152167173 December 206230235

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