The Mexican restaurant, located in Riverside, California, is owned and operated by David Hume. The restaurant just completed its second year of operation. During that time, David sought to establish a reputation for the restaurant as a high-quality dining establishment that specializes in fresh Mexican. Through the efforts of David and his staff, his restaurant has become one of the best and fastest-growing restaurants on the island. To better plan for future growth of the restaurant, David needs to develop a system that will enable her to forecast food and beverage sales by month for up to one year in advance. Table 1 shows the value of food and beverage sales ($1000s) for the first two years of operation

Table 1- Food and Beverage Sales for James' Mexican Restaurant ($1,000s)

Month	Year 1	Year 2
January February March April May June July August September October November December	242 235 232 178 184 140 145 152 110 130 152 206	263 238 247 193 193 149 157 161 122 130 167 230

Perform an analysis of the sales data for the Mexican restaurant. Summarizes your findings, forecasts, and recommendations, including the following:

Construct a time series plot.

Comment on the underlying pattern in the time series.

Using the quarterly dummy variable approach, forecast sales for January through December of the third year. For instance, you would have three dummy variables - quarter 1, quarter 2, and quarter 3 and quarter 4 is a baseline quarter. Quarter 1=1 if sales occurs in January, February, or March, otherwise, Quarter 1=0. Quarter 2=1 if sales occurs in April, May or June, otherwise, Quarter 2=0. Quarter 3=1 if sales occurs in July, August, or September, otherwise, Quarter 3=0.

Assume that January sales for the third year turn out to be $265,000. What was your forecast error? If this error is large, David may be puzzled about the difference between your forecast and the actual sales value. What can you do to resolve his uncertainty in the forecasting procedure?