Forecasting at Hard Rock Cafe

Topics: Forecasting, Regression analysis, Arithmetic mean Pages: 2 (827 words) Published: July 21, 2013
Forecasting at Hard Rock Café

Forecasting is important for all manufacturing and services companies. Hard Rock Cafe needs to forecast for the long term, intermediate term, and short term. These three different forecasting applications are essential to the cafes day by day operations, and for a successful planning of budget, profits forecast, and cash flow forecast. In the long term a forecast is used to determine the capacity needed for the growth of sales in each store. The sale forecast for each unit is used for example to implement long term contracts to purchase beef, chicken, and pork not only for the existing locations but also for the new locations planned to be established. For the intermediate term, a forecast is necessary to buy raw materials that are used to elaborate items on sale in the shopping facilities of the cafes and hotels. For example, raw materials for the leather jackets need to be ordered 8 months ahead. And, in the short term, food and labor for daily operations should be forecasted. Hard Rock uses many of the forecasting techniques as: moving averages, weighted moving averages, exponential smoothing, and regression analysis. They start forecasting at the unit level every month, then take it to the quarter, and then to a year. All this data is compared to previous years and to the budget expectation to make decisions in the course of the year that meet those expectations. Forecasting techniques are applied to calculate things as remodeling of locations, changes in the menu, and managers annual bonuses. To evaluate changes to be made in the menu, Hard Rock uses regression analysis, that way they analyze how changing the price in one item of the menu could affect the demand for other items in the menu related to that particular component. Hard Rock utilizes weighted average to establish the manager’s annual bonuses. They take the last 3 years performance and do a weighted average, placing more weight to the two most recent...

References: 1. Heizer, Render. (2011). Principles of Operations Mangement. New Jersey: Prentice Hall.
2. Prentice Hall Business Publishing (Beverly Amer). (2004). Forecasting at Hard Rock Cafe. Retrieved from¢erwin=yes.
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