Rachel’s Breakfast Café

1.  Develop forecasts using regressions of sales on each of the series of rain forecasts, respectively. Calculate the MFE (bias), MAD, and MAPE for the two forecasting models. Which rain forecast seems to be better at predicting Rachel’s daily sales, the five-day forecast or the two-day forecast?

2.  How can Rachel make use of the rain forecasts to improve her forecasts of total sales each day? What other changes to her business would she need to make in order to capitalize on this information?

3.  How are order lead time and forecasting accuracy related to each other in this case?

4.  Plot and visually inspect the sales data. What other suggestions would you give Rachel for improving her sales forecasts? What type of time series model would be appropriate? Why?