Case Study Analysis

School of Business and Governance

Ateneo de Davao University

Submitted to :
Mr. Jose Karlo Caballero
In fulfilment for the requirements on
Math
Submitted by:
Pantojan, Aillynne Mae
Patlunag, Gwenn Aries
Saligumba, Gio Dale
Sereno, Caryll Gale

August 18, 2013

I. Introduction
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 therestaurant 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.
II. Problem Statement
Perform an analysis of the sales data for the Vintage Restaurant. Prepare a report for Karen that
summarizes your findings, forecasts, and recommendations.
Include the following:
1. A graph of the time series.
2. 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.
3. A forecast of sales for January through December of the fourth year.
4. 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?
5. Recommendations as to when the system that you have developed should be updated to account for new sales
data that will occur.
6. Detailed calculations of your analysis in the appendix of your report.
III. Objective
To enable Karen to forecast food and beverage sales by month for up to one year in advance so that she
will be able to anticipate the future and develop appropriate strategies.

IV. Analysis
The time series plot is shown below:

Time Series
300
250
200
150
100
50
0
0

10

15

20

25

30

35

40

Month 1 = January for year 1;

month 2 =February for year 1;
and so on.
The time series plot indicates a linear trend and a seasonal pattern. The graph above shows a
straight line that may be a good approximation of the trend in Food and beverages sales. It has no consistent
increase or decrease over time and thus no trend.
2. Analysis of seasonality:
Seasonal-Irregular
Month

Component Values

Seasonal
Index

January

1.445

1.441

1.44

February

1.301

1.297

1.30

March

1.344

1.343

1.34

April

1.047

1.034

1.04

May

1.044

1.054

1.05

June

.779

.801

.80

July

.882

.834

.83

August

.857

.848

.85

September

.618

.638

.63

October

.725

.675

.70

November

.843

.862

.85

December

1.137

1.180

1.16

The deseasonalized time series is shown below:

t

Deseasonalized

Sales

Deseasonalized
Sales

168.06

19

189.16

180.77

20

189.41

173.13

21

193.65

171.15

22

185.71

175.24

23

196.47

175.00

24

198.28

174.70

25

195.83

178.82

26

196.15

174.60

27

197.76

10

185.71

28

197.12

11

178.82

29

200.00

12

177.59

30

200.00

13

182.64

31

200.00

14

183.08

32

204.71

15

184.33

33

200.00

16

185.58

34

211.43

17

183.81

35

203.53

18

186.25

36

202.59

The trend line fitted to the deseasonalized time series is

T t = 169.499 + 1.02 t
3.

Sales forecasts
Forecast for Year 4
Using T t = 169.499 + 1.02 t

Trend

Seasonal

Monthly

Month

Forecast

Index

Forecast

January

207.239

1.44

298.424

February

208.259

1.30

270.737

March

209.279

1.34

280.434

April

210.299

1.04

218.711

May

211.319

1.05

221.885

June

212.339

.80

169.871

July

213.359

.83

177.088

August

214.379

.85

182.222

September

215.399

.63

135.701

October

216.419

.70

151.493

November

217.439

.85

184.823

December

218.459

1.16

253.194

4..

Forecast error = $295,000 - $298,424 = -$3,424

The forecast we developed over predicted by $3,424; this represents a very small error.V.
Solutions

Month

Seasonal Index

January

1.445+1.441/2

1.44

February

1.301+1.297/2

1.30

March

1.344+1.343/2

1.34

April

1.047+1.034/2

1.04

May

1.044+1.054/2

1.05

June

.779+.801/2

.80

July

.882+.834/2

.83

August

.857+.848/2

.85

September

.618+.638/2

.63

October

.725+.675/2

.70

November

.843+.862/2

.85

December

1.137+1.180/2

1.16

Deseasonalized

Sales

Deseasonalized
Sales

168.06=242/1.44

19

189.16=157/.83

180.77=235/1.30

20

189.41=161/.85

173.13=232/1.34

21

193.65=122/.63

171.15=178/1.04

22

185.71=130/.70

175.24=184/1.05

23

196.47=167/.85

175.00=140/.80

24

198.28=230/1.16

174.70=145/.83

25

195.83=282/1.44

178.82=152/.85

26

196.15=255/1.30

174.60=110/.63

27

197.76=265/1.34

10

185.71=130/.70

28

197.12=205/1.04

11

178.82=152/.85

29

200.00=210/1.05

12

177.59=206/1.16

30

200.00=160/.80

13

182.64=263/1.44

31

200.00=166/.83

14

183.08=238/1.30

32

204.71=174/.85

15

184.33=247/1.34

33

200.00=126/.63

16

185.58=193/1.04

34

211.43=148/.70

17

183.81=193/1.05

35

203.53=173/.85

18

186.25=149/.80

36

202.59=235/1.16

Trend Forecast
Month
January

Seasonal

Monthly Forecast

Index
207.239=

1.44

298.424= 207.239*1.44

1.30

270.737=208.259*1.30

1.34

280.434=209.279*1.34

1.04

218.711=210.299*1.04

1.05

221.885=211.319*1.05

.80

169.871=212.339*.80

.83

177.088=213.359*.83

.85

182.222=214.379*.85

.63

135.701=215.399*.63

.70

151.493=216.419*.70

169.499+1.02(37)
February

208.259=
169.499+1.02(38)

March

209.279=
169.499+1.02(39)

April

210.299=
169.499+1.02(40)

May

211.319=
169.499+1.02(41)

June

212.339=
169.499+1.02(42)

July

213.359=
169.499+1.02(43)

August

214.379=
169.499+1.02(44)

September

215.399=
169.499+1.02(45)

October

216.419=

169.499+1.02(46)
November

217.439=

.85

184.823=217.439*.85

1.16

253.194=218.459*1.16

169.499+1.02(47)
December

218.459=
169.499+1.02(48)

Suppose the actual January sales for the fourth year turn out to be $295,000. The forecasted January sales are
$296,458.
Forecast error = $295,000 - $298,424 = -$3,424

VI. Conclusion
Karen does not have to worry about the error and she can be assured that her forecast model is
extremely good. She has to update the data monthly to have a better understanding of the pattern of past
sales, leading to better prediction of the future sales for the product. The analysis can be easily
updated each month, especially if a computer software package is used to perform the
analysis.