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 establishment that specializes in fresh seafood. Through the efforts of Karen and her staff, her restaurant has become one of the best and fastest-growing restaurant on the Island.
To better plan for future growth for 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.
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| Month | First Year | Second Year | Third Year |
| January | 242 | 263 | 282 |
| February | 235 | 238 | 255 |
| March | 232 | 247 | 265 |
| April | 178 | 193 | 205 |
| May | 184 | 193 | 210 |
| June | 140 | 149 | 160 |
| July | 145 | 157 | 166 |
| August | 152 | 161 | 174 |
| September | 110 | 122 | 126 |
| October | 130 | 130 | 148 |
| November | 152 | 167 | 173 |
| December | 206 | 230 | 235 |
Perform an analysis of the sales data for Vintage Restaurant. Prepare a report for Karen that summarizes your findings, forecasts, and recommendations. Include the following at a minimum.
A time series plot. Comment on the underlying pattern in the time series.
Using the dummy variable approach, forecast sales for January through December of the fourth year. How would you explain this model to Karen?
A forecast using the four forecasting methods discussed in section 3.2 in Module 3. In the case of moving averages and exponential smoothing, choose the values of k and α that you think work best (you may want to try some different values to zero in on the best values to use).
A table of the five forecasting methods (regression with dummies, naïve, average of all historical data, moving average, exponential smoothing) and their forecast accuracy measures (MFE, MAE, MSE, MAPE). Based on the table, which forecasting method seems like the best candidate.
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.
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Since a significant portion of your work for this assignment will be done in MS Excel, please submit your Excel file with the data and graphs, as well.