The Vintage Restaurant, on Captiva Island near Fort Myers, Florida, is owned and operatedby Karen Payne. The restaurant just completed its third year of operation. Since openingher restaurant, Karen has sought to establish a reputation for the Vintage as a high-qualitydining establishment that specializes in fresh seafood. Through the efforts of Karen and herstaff, 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 thatwill enable her to forecast food and beverage sales by month for up to one year in advance.Table 18.26 shows the value of food and beverage sales ($1000s) for the first three years ofoperation.Managerial ReportPerform an analysis of the sales data for the Vintage Restaurant. Prepare a report for Karenthat summarizes your findings, forecasts, and recommendations. Include the following:1. A time series plot. Comment on the underlying pattern in the time series.2. An analysis of the seasonality of the data. Indicate the seasonal indexes for eachmonth, and comment on the high and low seasonal sales months. Do the seasonalindexes make intuitive sense? Discuss.3. Deseasonalize the time series. Does there appear to be any trend in the deseasonalizedtime series?4. Using the time series decomposition method, forecast sales for January throughDecember of the fourth year.5. Using the dummy variable regression approach, forecast sales for January throughDecember of the fourth year.6. Provide summary tables of your calculations and any graphs in the appendix of yourreport.Assume that January sales for the fourth year turn out to be $295,000. What was yourforecast error? If this error is large, Karen may be puzzled about the difference betweenyour forecast and the actual sales value. What can you do to resolve her uncertainty in theforecasting procedure?