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 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 Karen?
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?
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 that time, 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 restaurants on the island.
To better plan for future growth of 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 February March April May June July August September October November December 282 255 265 205 210 160 166 174 126 148 173 235 242 232 178 184 140 145 152 110 130 152 206 238 247 193 193 149 157 161 122 130 167 230 8