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For years The Glass Slipper restaurant has operated in a resortcommunity near a popular ski area of New Mexico.
For years The Glass Slipper restaurant has operated in a resortcommunity near a popular ski area of New Mexico. The restaurantis busiest during the first 3 months of the year, when theski slopes are crowded and tourists flock to the area.When James and Deena Weltee built The Glass Slipper,they had a vision of the ultimate dining experience. As the viewof surrounding mountains was breathtaking, a high priority wasplaced on having large windows and providing a spectacularview from anywhere inside the restaurant. Special attention wasalso given to the lighting, colors, and overall ambiance, resultingin a truly magnificent experience for all who came to enjoygourmet dining. Since its opening, The Glass Slipper has developedand maintained a reputation as one of the "must visit"places in that region of New Mexico.While James loves to ski and truly appreciates the mountainsand all that they have to offer, he also shares Deena'sdream of retiring to a tropical paradise and enjoying a morerelaxed lifestyle on the beach. After some careful analysis oftheir financial condition, they knew that retirement was manyyears away. Nevertheless, they were hatching a plan to bringthem closer to their dream. They decided to sell The GlassSlipper and open a bed and breakfast on a beautiful beach inMexico. While this would mean that work was still in theirfuture, they could wake up in the morning to the sight of thepalm trees blowing in the wind and the waves lapping at theshore. They also knew that hiring the right manager would allowJames and Deena the time to begin a semi-retirement in acorner of paradise.To make this happen, James and Deena would have to sellThe Glass Slipper for the right price. The price of the businesswould be based on the value of the property and equipment, aswell as projections of future income. A forecast of sales for thenext year is needed to help in the determination of the value ofthe restaurant. Monthly sales for each of the past 3 years areprovided in Table 5.14.Questions1. Prepare a graph of the data. On this same graph, plot a12-month moving average forecast. Discuss any apparenttrend and seasonal patterns.2. Use regression to develop a trend line that could be usedto forecast monthly sales for the next year. Is the slope ofthis line consistent with what you observed in question 1?If not, discuss a possible explanation.3. Use the multiplicative decomposition model on thesedata. Use this model to forecast sales for each month ofthe next year. Discuss why the slope of the trend equationwith this model is so different from that of the trend equationin question 2.Month 2008 2009 2010January 438 444 450February 420 425 438March 414 423 434April 318 331 338May 306 318 331June 240 245 254July 240 255 264August 216 223 231September 198 210 224October 225 233 243November 270 278 289December 315 322 335