Kiana has gathered monthly data for 2016 - 2018.

She will use this data to formulate a forecast for 2019.

all of the data needed is listed below. following the steps would allow me to create everything by initially starting with the data.

Jan-2357

Feb-2572.5

Mar-2666.5

Apr-2978

May-3443

June-3325

July-2177

Aug-2319

Sep-2490

Oct-3536

Nov-3398.5

Dec-3490.5

Jan-2408

Feb-2605.5

Mar-2698.5

Apr-2965

May-3577

June-3462

July-2611

Aug-3027.5

Sep-3022.5

Oct-3782

Nov-4252.5

Dec-3977.5

Jan-2459

Feb-3012.5

Mar-3028.5

Apr-3405

May-3696

June-3907

July-2973

Aug-3285.5

Sep-3314.5

Oct-4506

Nov-4692

dec-5059

Based off of these forecasts and her financial data, she will estimate her payoffs.

She is considering two Decision Alternatives:

1.Continue running the shop as she has planned

2. Buying into a franchise

The franchise will cost her $5500 per month.They have also said that she can expect her demand to increase by 21% each month over her projections.

She is considering three States of Nature:

Average Demand, which is based off of her above-mentioned demand forecast,

High Demand (20% above average demand),

Low Demand (25% below average demand).

Based on the economic forecast she has received, the probabilities she associates with the three states of nature are:

55% for average demand.

20% chance of high and

25% chance of low demand

Based on the above information the question you are to answer is which Decision Alternative should Kiana pick and why?

Steps:

1.Generate a Forecast and explain why you chose this method;

Take data, create forecast based on the classical decom example, except monthly data instead of quarterly.

For help review Chapter 5 part C.This calculation is like the monthly part of exercise 6.

2.Using forecast from step 1, create profit models based on this average demand.Assume a fixed level of production of 4000 and reduced revenue per unit for leftovers that have to be sold at a reduced cost and extra expenses for unhappy customers.

A.Decision Alternative 1: Continue as planned

Create profit model using Demand from Step 1.

B.Decision Alternative 2: Join franchise... increase profits, increase costs

1.Copy the model for Alternative 1, increase by numbers given above for franchise option.

3.Develop 3 scenarios for each of the profit models from Step 2:

a.High Demand: Make copy of the above model and change demand so 20% higher than the above model.

b.Low Demand: Make copy of the Average model and change demand so 25% lower.

4.Using all the methods determine which choice is the best.

This is very similar to in-class exercise 7 (Chapter 6 part 1).

5.Generate an Executive summary document explaining the process you used to arrive at your decision and

supporting your choice.