Optimistic Enterprises is a small company specializing in producing herbal products. The company has been especially successful in producing a very popular and delicious drink called Cool Vibez. This drink had taken off in the local marketplace and has been a spectacular hit with not only locals but visitors to the island as well.

The operators of Optimistic Enterprises have faced increasing demand to supply the Cool Vibez drink to overseas markets where there are large concentrations of Jamaicans as well as foreigners who have a distinct interest in the Jamaican brand. The principals of the company are extremely cautious however as they have run into problems in the past where they have not satisfied the demand for a particular period, while in other instances they have subsequently over supplied the required amount for a period.

The table below shows actual sales for a period:

Months Sales units (Cases)

January 4000

February 5000

March 6000

April 6500

May 6300

June 7000

The principals of the company are considering forecasting techniques to ensure a more appropriate quantity of the product is provided and they are also interested in designing an appropriate Supply Chain Management network as they expand into foreign markets.

A. Discuss FOUR (4) factors which would influence the supply chain network design decisions to be made by Optimistic Enterprises. For each of the factors, give an example to show how it could impact supply chain network decisions. (12 marks)

B. Use a weighted three-month moving average to calculate the forecast of sales for April to June. Apply weights of 1, 2 and 3 with the highest weights assigned to the most recent observation. (6 marks)

C. Explain how it would benefit Optimistic Enterprises to determine to calculate the accuracy of forecasts. (2 marks)