Forcasting food and beverage sales

Chapter 8 Time Series Analysis and Forecasting CASE PROBLEM 1. FORECASTING FOOD AND BEVERAGE SALES The Vintage Restaurant, on Captiva Island near Fort Myers, Florida, is owned and operated by Karen Payne. The restaurant just completed its third year of operation. During those three years , Karen sought to establish a reputation for the restaurant as a high-quality dining estan lishment that specializes in fresh seafood. Through the efforts of Karen and her staff, her restaurant has become one of the best and fastest-growing restaurants on the Island, To better plan for future growth of the restaurant, Karen needs to develop a system that will enable her to forecast food and beverage sales by month for up to one year in advance. The following table shows the value of food and beverage sales ($1,000s) for the first three years of operation: Third Year 263 282 255 265 205 210 Month First Year Second Year January 242 February va 235 238 March bio 10232 to zorty 247 lo 156 April Sogorb 178 193 bayo silang tatlo soit May 184 oli tot 193 de 2 June gonilo 140 to 147 149 July do 145 for 2 157 los August olz ni bn 152 sanoat 161 September no 110 visiocolo 122 130 November 152 167 December 206 som 230 160 166 174 di to October 126 than 130 148 173 235 Managerial Report Perform an analysis of the sales data for the Vintage Restaurant. Prepare a report for Karen that summarizes your findings, forecasts, and recommendations. Include the following: 1. A time series plot. Comment on the underlying pattern in the time series. Stil 2. Using the dummy variable approach, forecast sales for January through December lub bu of the fourth year. How would you explain this model to Karen? Assume that January sales for the fourth year turn out to be $295,000. What was your forecast error? If this error is large, Karen may be puzzled about the difference between your forecast and the actual sales value. What can you do to resolve her uncertainty about the forecasting procedure