Ch5 Forecasting Restaurant Sales complete solutions correct answers key

Ch5 Forecasting Restaurant Sales complete solutions correct answers key

The C’mon Back Restaurant in Puerto Rico is owned and operated by Theotis Jones. The restaurant just completed its third year of operation. During that time, Theotis sought to establish a reputation for the restaurant as a high-quality dining establishment that specializes in fresh seafood. Through the efforts of Theotis 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, Theotis needs to develop a system that will enable him 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 (the data are also in the file “Ch5 Forecasting”):

Managerial Report

Perform an analysis of the sales data for the restaurant. Prepare a report for Theotis

that summarizes your findings, forecasts, and recommendations. Include the following:

1. A time series plot. Comment on the underlying pattern in the time series.

2. Using the dummy variable approach, forecast sales for January through December of the fourth year. How would you explain this model to Theotis?

Assume that January sales for the fourth year turn out to be $295,000. What was your forecast error? If this error is large, Theotis may be puzzled about the difference between your forecast and the actual sales value. What can you do to resolve his uncertainty about the forecasting procedure?