Demand & Forecasting

DEMAND & international ampere FORCASTING Founded as a single store in 1960, Dominos pizza pie instantly stands as the recognized world leader in pizza deli really. From the beginning, we suck been dedicated to the best of service, quality products and delivery excellence. They currently pose over 9000 stores worldwide, all dedicated to providing great-tasting pizza delivered directly to your door or acquirable for carryout. They have pi championered the pizza delivery business, and sell much than 400 cardinal pizzas worldwide every course.Dominos Pizza is recognized as a Megabrand by Advertising Age magazine, and has been named Chain of the Year by Pizza Today, the leading publication of the pizza industry, three times (dominoes). Metuchen is a very small town in Middlesex County, NJ. It is located right in the center field of Edison, NJ. It is wholly 2. 76 squargon miles with a existence of over 13000. The median(prenominal) income is around $90000. There is approximate ly 5300 household consisting of 2. 56 people. And 30% of the population is under 18 years old (US Census). This can be construe as in that location are mostly families with kids in this community.Currently, in that location are no fast food pizza stores or any other(a) fast food restaurants in the town. Edison does have many restaurants including two Dominos, one in South Edison and one in North Edison. However, neither of them delivers to Metuchen. The only direct competitor in the area is Pizza Hut. Metuchenites often cop to know their local merchants and bugger off personalized service they find absent at large chain stores in the nearby shopping malls Metuchen). establish on the Metuchen demographic instruction, I chose the following inconsistents households, income, and price of complimentary goods.I study households to be more relevant than population based on the concomitant that the town consists of families with one or more children. A household get out consume o ne or more pies per visit. And people with children are more likely to buy fast food. I chose to use income because income along with the vacillation of price is a major factor for the want of pizza. Also we apply the variable for the price of the complimentary good Soda. People almost continuously buy restorative or some other drink with their pizza. Although, there are some family owned competitors, I did not include them in this analysis because they are a ifferent type of pizza store. Dominos specializes in fast food delivery. And many of the family owned does not. VARIABLES Year Qd price/pie soda/ liter population households Income 2010 125000 5 1 13,574 5,249 88,241 2011 127000 5. 49 1. 25 13,648 5,376 91365 2012 129000 5. 99 1. 5 13795 5491 94,410 Elasticity refers to the magnitude and the direction quantity demanded changes in retort to a percentage change in the variable. establish on the information collected, we determined that all of the variables are inelastic. Th e price breeze is 0. 163 and the price duck soup of soda is 0. 64. This means that the change in price ordain issuance in a lesser percentage change in quantity. basically this poses that the fluctuation in price give not affect the demand too much. This is also true for the income. The income elasticity is 0. 452. This shows that if income increases, the demand for pizza will increase at a lower rate also. When price goes up, the Qd will go down based on the disposable income of the families. The income is high seemly to withstand the price increase. This is also true for the issuing of households. Household elasticity is 0. 661. ELASTICITY rice/pie soda/ liter population households Income 0. 163 0. 064 2. 935 0. 661 0. 452 0. 173 0. 079 1. 462 0. 736 0. 473 dead Inelastic Elastic Inelastic Inelastic Smoothing techniques assumes that a repetitive underlying intention can be found in the historical values of the variable being forecasted. The travel clean is calculated by taking an medium of past observations. The more observations included, the greater the smoothing effect. It gives the same weight to all the observations. The exponential model allows you to determine the weight of the observation between 0 and 1.Below we utilise four different smoothing techniques to forecasts the demand for pizza for years 2013-2015. The four models show the demand to be between 127500 and 128500. DEMAND FORECAST Year existent Demand 5 year Moving Average 3 year Moving Average Exponential Smoothing w=0. 9 Exponential Smoothing w=0. 3 2007 126000 126000 126000 2008 129000 126000 126000 2009 131000 128700 126900 2010 125000 128667 130770 128130 2011 127000 128333 125577 127191 2012 129000 127600 127667 126858 127134 2013 128300 128200 127000 128786 127694 014 128100 128060 128100 128349 127876 2015 127480 128467 128125 127943 The root mean square error is used to pass judgment the accuracy of the forecasting model. The lower RMSE means the estimate is more correct. RMSE RMSE 811 1933 2790 2377 Based on the RMSE for each of the estimates, I would estimate the 3 year moving average to be the best estimate. Although the 5 year moving average has a lower RMSE, I dont think it is an accurate estimate because there are not enough years to get an accurate estimate. Based on the information collected, we could open a Dominos in the community and expect to do well.The forecast for demand of pizza seems to fluctuate between 127500 and 128500. Although the forecasts seems pretty stable, it doesnt look like there will be too much growth unless the number of households and income have a larger increase that previously. The inelasticity of variables shows me that as price goes up, there will be a smaller decrease in quantity demanded. However, the income and the number of households are also inelastic. As incomes and households grow, so will the quantity demanded by a smaller increase. The price elasticity is smaller than the income and h ousehold elasticity.So boilers suit the quantity demanded should increase. WORKS CITED United States Census Bureau, US department of commerce, retrieved October 22, 2012 from http//quickfacts. census. gov/qfd/states/34/3445690. html Income Tax List, retrieved October 27, 2012 from http//www. incometaxlist. com/new-jersey-income-tax-by-zip-code-33. htm Dominos Pizza, retrieved October 27, 2012 from http//phx. corporate-ir. net/phoenix. zhtml? c=135383&p=irol-homeprofile Borough of Metuchen, retrieved October 23, 2012 from http//www. metuchennj. org/brochure1999. pdf