The Midwest Computer Company serves a large number of businesses in the Great Lakes region. The company sells supplies and replacements and performs service on all computers sold through seven sales offices. Many hems are stocked, so close inventory control is necessary to assure customers of efficient service. Recently, business has been increasing, and management is concerned about stock outs. A forecasting method is needed to estimate requirements several months in advance so that adequate replenishment quantities can be purchased. An example of the sales growth experienced during the last 50 months is the growth in demand for item EP-37, a laser printer cartridge, shown in Table.

a. Develop a trend-adjusted exponential smoothing solution using POM for Windows for forecasting demand. Find the best parameters and justify your choices. Forecast demand for month 51.
b. A consultant to Midwest’s management suggested that new office building leases would be a good leading indicator for company sales. The consultant quoted a recent university study finding that new office building leases precede office equipment and supply sales by three months. According to the study findings, leases in month i would affect sales in month 4, leases in month 2 would affect sales in month 5, and so on. Use POM for Windows’ linear regression module to develop a forecasting model for sales, with leases as the independent variable. Forecast sales for month 51.
c. Which of the two models provides better forecasts?Explain.

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EP-37 SALES AND LEASE DATA EP-37 Sales 1296 1199 1,267 1300 1370 1,489 1,499 1,669 1,716 1,603 1,812 1817 1,798 1,873 1.923 2,028 2.049 2,084 2,083 2,121 2,072 2.262 2,371 2.309 2 422 Month Month Leases EP-37 Sales 80 132 143 Leases 168 343 0 1 397 370 147 138 145 160 410 837 413 743 180 197 203 470 1.057 930 1,085 1,090 1,218 247 242 234 254 490