The manager of materials store in company Always One is having difficulties maintaining materials stocks at the right level. Sometimes he runs out of materials, sometimes he is overstocked. He admits that the decision as to what to order and in what quantities is left to the store supervisor who adopts a policy of ordering when he thinks stock are getting low and guesses as to what quantities to order.

a) Present the arguments for a forecasting policy.

b) Material X is a high cost item used for a product with a demand which can fluctuate quite widely, material Y is low cost item used with a number of products and for which the demand is quite stable, material Z is a medium cost item for which the demand changes, but not usually at a rapid rate. Advocate forecasting methods for each of material.