Forecasting Monthly Sales Essay

BackgroundFor years The shabu carpet slipper eatery has operated in a resort biotic community near a popular ski area of New Mexico. The restaurant is busiest during the first 3 months of the year, when the ski careens are crowded and tourists flock to the area. When crowd and Deena Weltee built The Glass Slipper, they had a vision of the ultimate dining experience. As the view of surrounding mountains was breathtaking, a high priority was placed on having large windows and providing a spectacular view from anywhere inside the restaurant. surplus attention was also given to the lighting, colors, and overall ambiance, resulting in a rattling magnificent experience for all who came to enjoy gourmet dining. Since its opening, The Glass Slipper has developed and maintained a reputation as one of the essential visit places in that region of New Mexico. bit James loves to ski and truly appreciates the mountains and all that they make to offer, he also shares Deenas vision of ret iring to a tropical paradise and enjoying a more relaxed lifestyle on the b to each one. After some careful analysis their financial condition, they knew that hideaway was many years away. Nevertheless, they were hatching a plan to bring them encompassing(prenominal) to their ideate. They decided to sell The Glass Slipper and open a make do and breakfast on a beautiful beach in Mexico. While this would mean that work was still in their forthcoming, they could wake up in the morning to the sight of the palm trees blowing in the wind and the waves lapping at the shore. They also knew that hiring the right manager would allow James and Deena the time to cast down a semi-retirement in a corner of paradise. To make this happen, James and Deena would have to sell The Glass Slipper for the right price. The price of the business would be based onthe value of the stead and equipment, as well as projections of future income.Problem StatementJames and Deena are currently the owners of The Glass Slipper, a popular ski resort in New Mexico. Their dream is to retire and move to a more tropical location. While they find out that full retirement is not an option at this point, they are volition to sell The Glass Slipper and open a bed and breakfast on a Mexico beach which affords them a semi-retirement option for their near future plans. In dictate for them to have enough profit from the sale to commit their intended lifestyle transition, they are requiring the sale price to include property and equipment as well as future sales projections. Using selective information from the previous three years, a projection of the following years data will be made and evaluated.DataMonthly tax income (In $1,000s)Problems1. Prepare a graph of the data. On this same graph, plot a 12-month moving average forecast. Discuss any apparent trend and seasonal worker patterns.The seasonal pattern shows that through the summer and run there is decreased sales revenue that can be attr ibuted to the lack of snow covering fire the resort area, but still being a location plurality like to visit. As the snow accumulation increases starting in new-fashioned fall, sales begin to pick up and reach the maximum levels in the early part of the years during January. Sales remain high during this wintertime time frame until significant decreases in the spring through fall months.2. Use regression to develop a trend broth that could be used to forecast monthly sales for the next year. Is the slope of this line consistent with what you observed in fountainhead 1? If not, discuss a possible explanation.The trend line that could be used is Y = 330.889 1.162 * Time. The slope of this trend line is negative and not consistent with what was observed in question 1. Fluctuations in the seasonal indices, specifically January andFebruary, are affecting the unadjusted data and creating a negative slope trend.3. Use the increasing decay model on these data. Use this model to fo recast sales for each month of the next year. Discuss why the slope of the trend comparison with this model is so different from that of the trend equation in question 2.Table 1.1The sales forecast for the next year is shown in the set Forecast column of Table 1.1. Trend line data for the multiplicative decomposition model is Y = 294.524 + .86 * Time. The reason for the trend line residue from question 2 is that when you use the decomposition method, you are taking into enumerate seasonal indices that are used in the computation to deseasonalize the data for a more accurate determination of predicted sales. Utilizing this model is more likely to fire a more accurate forecast for James and Deena in order to set their selling price.