FORECASTING HARD ROCK CAFENicole Leahey & Heather Spielvogel

Chapter 4

OVERVIEW• Forecasting

• Types of Forecasts

• Steps in the Forecasting System

• Qualitative and Quantitative Methods

• Time- Series Forecasting

• Seasonal Variations in Data

• Video

• Hard Rock Forecasting

• Recommendations for Future

• Activity

FORECASTING• The art and science of predicting future events

• 3 Types of forecasting time horizons:

• Short- range forecast

• Medium- range forecast

• Long- range forecast

FORECASTING CONTINUED

• Influence of the Product Life Cycle:

• Four stages • Introduction

• Growth

• Maturity

• Decline

TYPES OF FORECAST

• 3 Types of major forecasts:

• Economic- Business rates

• Technological

• Demand

TYPES OF FORECASTING CONTINUED

• Product demand forecasting impacts: • Human resources

• Capacity

• Supply chain management

STEPS IN THE FORECASTING SYSTEM

1. Determine the use of the forecast

2. Select the items to be forecasted

3. Determine time horizon of the forecast

4. Select the forecasting model

5. Gather the data needed to make the forecast

6. Make the forecast

7. Validate and implement the results

QUALITATIVE METHODS• Forecasts that incorporate such factors as the decision- makers intuition,

emotions, personal experiences, and value system

• Qualitative techniques

• Jury of executive opinion

• Delphi Method- Executive management making decisions

• Sales force composite- Sales associates making certain forecasting decisions

• Consumer market survey- Customers help in decision process

QUANTITATIVE METHODS

• Times Series Models

• Predict on the assumption that the future is a function of the past

• Associative Models

• Incorporate the variables or factors that might influence the quantity being forecasted

Quantitative Methods

Time Series Models

Naïve Approach

Moving Averages

Exponential Smoothing

Trend Projection

Associative Model

Linear Regression

QUANTITATIVE AVERAGES

Moving Average Forecast

• A forecast that uses a number of historical actual data values to generate a forecast

Linear Regression

• Model that describes the

functional relationships

between independent and

dependent variables

TIME-SERIES FORECASTING• Based on a sequence of evenly- spaced data points (weekly, monthly, quarterly,

and so on)

• Four major components:

• Trend

• Seasonality

• Cycles

• Random Variations (unpredictable situations)

SEASONAL VARIATIONS IN DATA

• Regular up-and-down movements in a time series that relate to recurring events such as weather or holidays

HARD ROCK FORECASTING

• Used to determine:

• demand of products

• The number of employees to hire

• Expansion needs for facilities

• Profits

• Gather all data at the café, data is then viewed and approved by upper management then final changes are made and implemented

• Used to compare cafes; if one is doing better, what can the other do to improve?

• They use technological forecasting such as their POS systems to forecast body count for that week/month/year

• Hard Rock Café uses regression

RECOMMENDATIONS• Implement qualitative methods such as a survey or questionnaire

• All that is really being used are quantitative methods and formulas for weekly/monthly/yearly forecasting

• Continue with the quantitative methods, but use of both could potentially be most successful for Hard Rock’s future

ACTIVITY

ACTIVITY ANSWER

THANK YOU!•Any questions?