Question

Dumitru: The bank wants more details – they aren’t comfortable with our revenue forecast. They want to know why we think revenue will grow in 2013 given the depressed state of the economy.

Denis: Okay Dad. I think I can help you with that. I can work up a forecast of the number of visitors to Las Vegas based on historical records.

Dumitru: I knew that fancy education of yours would help the business! Can you do something today?

Denis: Sure, Dad. I will email you something this evening after classes.

Dumitru Mironescu had helped his parents flee Romania in 1983 to escape the tyranny of Nicolae Ceauşescu. The family settled in Las Vegas and Dumitru had given up any ideas of furthering his education so that he could take a job to help the family survive. He started off modestly as a parking attendant at a major hotel until he learned to speak English properly. His hard work paid off and after a while he was parking the cars for guests using the valet service. His incredible attention to detail and friendly interaction with everyone was noticed and after a while he was offered the position of driver for the hotel limousine service. After several years of doing this, he and his friend, David, scraped together all the money they had and bought their own used vehicle and started their own limousine service. From those small beginnings, Dumitru now ran one of the best services in Las Vegas with a fleet of 17 vehicles.

During 2012, Dumitru decided that the time had come to replace three of his oldest vehicles and expand the fleet with two new vehicles. He approached his bank to finance the new purchases and submitted a business plan which his son, Denis, had helped him write.

Denis was very proud that he had been offered a position at a university in Tennessee to study for his MBA. He was determined to make the most of this opportunity and to help his Dad in every possible way. While Dumitru’s business had done quite well over the years, the recent recession had taken its toll. Denis knew that his father had made many sacrifices to fund his studies and he would be eternally grateful for that opportunity.

He knew that revenue for limousine services was driven by the number of visitors to the area. After searching the internet, Denis quickly found records of the number of visitors to Las Vegas over many years: http://www.lvcva.com/stats-and-facts/visitor-statistics/

From the annual data for 1970 to 2011, he noticed that the total number of visitors seemed to be reaching a plateau. From the monthly data, he noticed that there were some complex seasonal patterns. He downloaded the data and set to work. He had to forecast the number visitors for the period December 2012 through December 2013 and prepare a convincing argument that revenue would grow rather than remain static. He reached for the notes he took from the class on forecasting realizing that this was not going to be 10 minute exercise."

Write a breif summary (maximum of 200 words) of the background, the problem, the method of analysis and the recommendations.

Answer 1

Background - 2 new limo need to be purchased and a business plan needed for this purchase to be put up to the bank for approval and snactiooning of loan. Dumitru wants help from his son Denis on this.

Problem - Recession in the market, proper utilization of limos

Method of Analysis- Using historic visitor data to match supply demand as there is a plateau at a certain time of the year

Recommendations - Revenue will grow as we are now considering visitors data for complex seasonal patterns. Forecasting done using forcasting model on past data and the forecated figures will be used to convince growth in revenues