Chapter 4, Problem 2.5VC

Summary Introduction

Introduction:

HR café was started in 1971 with one pub in London and expanded to 129 restaurants in more than 40 countries. This raised the necessity for an improved forecasting system. The firm uses long-term forecast to set capacity plans and short term forecast to get contracts on leathers and food items. The firm adopts a point-of-sales (POS) system, which records the entry of each sale.

Each sales entry represents one customer and the headquarters database receives every sales data. The forecast is made on the basis of data, the guest counts, dinner sales, retail sales, and concert sales at each café. The firm also adopts information of the past year for the particular day and the information from the tourist board for the forthcoming program.

A bonus is given to managers who exceed their targets. The 3-year weighted average technique is adopted to estimate sales. They use multiple regressions to measure the impact of the demand of one item over others. The placements of food items are also taken as a measure to forecast demand.

To determine: To find the expected guest count when advertising is $65,000.