Case Study

Company ABC is a restaurant operation, located in the Sydney CBD, which prides itself on its emphasis on fresh produce and the preparation of meals at its customers tables, providing the ability for customers to modify a range of meals based on the available ingredients (for example, fruits, vegetables, and other ingredients that are in season). The operation has recently been experiencing increased competition from fast food chains, which has been further amplified given an uncertain economic and global environment in which individuals are less inclined to dine out at the restaurant. This has resulted in inconsistent customer demand and fluctuations. Company ABC has hired an operations manager (you) to assist in providing recommendations across various facets of the operation, in the hope of redirecting the operation and ensuring it is sustainable moving forward.

Question 3 (Total 10 marks)

The demand observations experienced by Company ABC for 5kg bags of rice that used in the restaurant are quantified on a weekly basis as per the following table. Included are four demand forecasts, of which there are two moving average forecasts and two exponential smoothing forecasts.

Time (Weeks)	Actual Demand observations	Forecast (Moving Average n=2)	Forecast (Moving Average n=5)	Forecast (Exponential Smoothing, =0.5)	Forecast (Exponential Smoothing, =0.9)
1	80	79	79	78	80
2	79	79	79	79	80
3	70	80	75	79	79
4	65	75	76	75	71
5	72	68	76	70	66
6	80	69	73	71	71
7	78	76	73	75	79
8	50	79	73	77	78

PLEASE WRITE AS MUCH AS YOU CAN!! WORD COUNT IS PRIORITY!!

Calculate the forecasts for all forecasting mechanisms (Moving Average and Exponential Smoothing) for weeks 9 and 10 if the demand observed at week 9 is 64. Explain the value of quantitative and qualitative forecasting techniques for Company ABC, given the current and uncertain environment.

Exponential Smoothing Forecast

Ft = aAt-1 + (1 a)Ft-1