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Simulation, Modeling, Trends and Forecasting

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Forecast of volumes of pizzas that will be sold in Johnston County

The number of pizzas sold will be extremely important to Lotto Pizza. Two factors will impact this number: population growth and percent of population who will purchase a Lotto Pizza. To establish the first number use the population history provided. Although population growth is exponential, to be conservative, assume a linear trend line for the points provided. Assume five persons comprise a family in Johnston County. Target date for opening Lotto Pizza will be January 1, 2007. Provide the estimated population per month for five years starting with January 1, 2007.

Johnston County North Carolina
Population in 2003 (July 1) 136, 802 8,407,248

Population percentage change: 12.2% 4.5%
April 1, 2000 to July 1, 2003

Population in 2000 (April 1) 121,965 8,049,313

Population percentage change: 50% 21.4%
1990 to 2000

The next problem will be to convert these populations into pizzas sold by Lotto Pizza. Your consulting firm has already been employed to survey the population and determine the expected number of pizzas that will be purchased in both formats of operation. Six hundred families were contacted and you determined that they will purchase 310 Dine-In pizzas and 347 Delivery pizzas per year.

Pizza sales are seasonal. The following table represents the seasonal demand. A "1.00" would be exactly 100% of the surveyed amounts..

Jan Feb Mar Apr May Jun Jul Aug
.90 .90 1.0 1.0 1.1 .90 .80 .80

Sep Oct Nov Dec
1.15 1.25 1.3 1.1

Start up time will also be a factor for Lotto Pizza. It will take a while for business to ramp up. Even after calculating the above number of pizzas sold each month, reduce the number sold in the beginning. Use 20% of the predicted amounts for January, 40% for February, 60% for March, 80% April, and finally assume 100% for May. From May on use your original numbers as modified by the seasonal adjustments...

With your numbers, predict the number of pizzas and the profit predicted per month for the next five years for the delivery and dine-in environments

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