Develop a model to forecast future demand

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Reference no: EM13899004

K's Brewery is selling its famous beers (K Lager, K-IPA, and K's Black Belt Ale) in four sales regions throughout Germany. These four regions are Northeast, Northwest, Southeast and Southwest. Due to cultural, as well as historic and political differences, demand in the four regions differs. The firm uses two general marketing tools: advertisements and promotions (determined by the marketing budget) and signing up restaurants as contract distributors that exclusively sell K beers. Regional managers are allowed to employ varying emphasis on these two strategies, depending on what they think works best in a given region. The table includes sales data for the past 12 months, as well as marketing budgets and number of contracted restaurants for each region (also per month). Also included is the proposed marketing budget for each region for the next month, and the number of restaurants that are expected to be under contract in the next month.

K's brewery's management wants to develop a model to forecast future demand. Which of the three possible predicting variables (marketing budget, number of contracted restaurants, or time) alone or in any possible combination represents the best forecasting model? Choose your preferred model, explain your choice, and forecast demand for the next month (Note: although beer sales may be subject to seasonality, you do not need to consider this to solve this problem). Further hints: The forecasts are done by each of the four regional managers, i.e. demand for each region is forecasted separately. The best forecasting model may not be based on the same predicting variable for each region.

Period (month) Demand Northeast Marketing/sales budget
Northeast
Number of contracted restaurants Northeast Demand Northwest Marketing/sales budget Northwest Number of contracted reastaurants Northeast
1 1200 25,000.00 € 80 800 18,000.00 € 50
2 1300 28,000.00 € 85 850 18,000.00 € 58
3 1200 30,000.00 € 93 820 18,000.00 € 63
4 1400 30,000.00 € 95 900 22,000.00 € 66
5 1500 30,000.00 € 95 880 22,000.00 € 67
6 1450 35,000.00 € 95 920 22,000.00 € 68
7 1550 35,000.00 € 95 900 25,000.00 € 73
8 1700 38,000.00 € 95 950 25,000.00 € 73
9 1800 35,000.00 € 95 1020 26,000.00 € 75
10 1630 35,000.00 € 95 930 27,500.00 € 79
11 1480 35,000.00 € 95 990 28,000.00 € 77
12 1480 35,000.00 € 95 1000 28,500.00 € 77
13
35,000.00 € 95
25,000.00 € 75

Demand Southeast Marketing/Sales Budget Southeast Number of contracted restaurants Southeast Demand Southwest Marketing/Sales Budget Southwest Number of contracted restaurants Southwest
990 20,000.00 € 88 1550 25,000.00 € 135
950 15,000.00 € 85 1600 25,000.00 € 135
940 15,000.00 € 80 1450 25,000.00 € 140
820 12,000.00 € 77 1500 28,000.00 € 143
900 12,000.00 € 78 1600 28,000.00 € 142
950 12,000.00 € 83 1450 28,000.00 € 144
1030 18,000.00 € 87 1640 28,000.00 € 151
1020 18,500.00 € 91 1670 28,000.00 € 158
1050 19,000.00 € 92 1750 25,000.00 € 160
1000 19,000.00 € 92 1780 25,000.00 € 157
1050 19,000.00 € 92 1800 25,000.00 € 161
1100 19,000.00 € 93 1850 25,000.00 € 161

20,000.00 € 93
25,000.00 € 160

Reference no: EM13899004

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