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, it is necessary to develop assistance that will enable her to forecast lubricant sales by month for up to one 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. Using Excel or any other software, draw a graph of the time series and comment on the data patterns present if any.

 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              242                  263                      282 

February            235                  238                      255 

March                232                  247                       265 

April                   178                   193                       205

 May                  184                   193                       210 

June                  140                   149                       160 

July                   145                    157                       166 

August              152                   161                        174 

September       110                   122                        126 

October            130                  130                       148 

November         152                  167                        173 

December        206                 230                        235