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Case Problem: The Vintage Restaurant is on Captiva Island, a resort community near Fort Myers, Florida. The restaurant, which is owned and operated by Karen Payne, has just completed its third year of operation. During that time, Karen has sought to establish a reputation for the restaurant as a high-quality dining establishment that specializes in fresh seafood. The efforts by Karen and her staff have proven successful, and her restaurant has become one of the best and fastest-growing restaurants on the island. Karen has concluded that to plan for the growth of the restaurant in the future, she needs to develop a system that will enable her to forecast food and beverage sales by month for up to one year in advance. Karen has the following data ($1000s) on total food and beverage sales for the three years of operation. The data can be found in an Excel spreadsheet (Lost Beverage and Food Sales).
Perform an analysis of the sales data for the Vintage Restaurant.
Prepare a report for Karen that summarizes your findings, forecasts, and recommendations. Include:
a. A graph of the time series.
b. An analysis of the seasonality of the data. Indicate the seasonal indexes for each month, and comment on the high and low seasonal sales months. Do the seasonal indexes make intuitive sense? Discuss.
c. A forecast of sales for January through December of the fourth year.
d. Recommendations as to when the system that you have developed should be updated to account for new sales data.
e. Any detailed calculations of your analysis in the appendix of your report.
f. Assume that January sales for the fourth year turn out to be $295,000. What was your forecast error? If this is a large error, Karen may be puzzled about the difference between your forecast and the actual sales value. What can you do to resolve her uncertainty in the forecasting procedure?
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