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JIM ADRIAN L. SOGOC
BSBA 1
PERFORMANCE TASK
FORECASTING AT EXIT CAFE
With the growth of Exit Café – from one pub in Manila in 1971 to more than 145 restaurants in 60
countries today – came a corporate-wide demand for better forecasting. Exit Rock uses long-range
forecasting in setting a capacity plan and intermediate-term forecasting for locking in contracts for
leather goods (used in jackets) and food items such as beef, chicken, and pork. Its short-term sales
forecasts are conducted monthly by the café and then aggregated for a headquarters view.
The heart of the sales forecasting system is the point-of-sale (POS) system, which, in effect, captures
transaction data on nearly every person who walks through a café’s door. The sale of each entrée
represents one customer; the entrée sales data are transmitted daily to the Tondo corporate
headquarters’ database. The financial team, headed by Lindsey Castillo, begins the forecast process
there. Lindsey forecasts monthly guest counts and retail, banquet, and concert sales (if applicable) at
each café. The general managers of individual cafes tap into the same database to prepare a daily
forecast for their sites. A café manager pulls up prior years’ sales for that day, adding information from
the local Chamber of Commerce or Tourist Board on upcoming events such as a major convention,
sporting event, or concert in the city where the café is located. The daily forecast is further broken into
hourly sales, which drives employee scheduling. An hourly forecast of P5,500 in sales translates into 19
workstations, further broken down into a specific number of wait staff, hosts, bartenders, and kitchen
staff. Computerized scheduling software plugs in people based on their availability. Variances between
forecast and actual sales are then examined to see why errors occurred.
Exit Cafe does not limit its use of forecasting tools to sales. A 3-year weighted moving average is applied
to the café sales to evaluate managers and set bonuses. If café general managers exceed their targets, a
bonus is computed. At corporate headquarters, Lindsey Castillo applies weights of 40% to the most
recent year’s sales, 40% to the year before, and 20% to sales two (2) years ago in reaching his moving
average.
An even more sophisticated application of statistics is found in the company’s menu planning. Using
multiple regression, managers can compute the impact on demand of other menu items if the price of
one item is changed. For example, if the price of a cheeseburger increases from P7.99 to P8.99, Exit Cafe
can predict the effect this will have on sales of chicken sandwiches, pork sandwiches, and salads.
Managers do the same analysis on menu placement, with the center section driving higher sales
volumes. When an item such as a hamburger is moved off the center to one of the side flaps, the
corresponding effect on related items, say French fries, is determined.
EXIT’S MAKATI CAFE
MONTH 1 2 3 4 5 6 7 8 9 10
Guest count
21 24 27 32 29 37 43 43 54 66
(in thousands)
Advertising
(in Php 14 17 25 25 35 35 45 50 60 60
thousands)
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Questions (5 items x 10 points: 5 points for the solution, 5 points for the explanation):
1. Describe three (3) different forecasting applications at Exit Cafe.
Answer: Exit cafe uses long-range forecasting in setting a capacity plan. The firm Stu intermediate-term
forecasting for locking in contracts for leather goods (used in jackets) and for such food items as beef, chicken,
and pork. Its short-term sales forecasts are conducted each month by the cafe and then aggregated for a
headquarters view.
2. Name three (3) other areas in which you think Exit Cafe could use forecasting models.
Answer: Other areas where forecasting can be applied are: in the long term, the number of visitors in different
time slots (breakfast, lunch or dinner), in the medium term, the preference for meals for a more select public,
vegetarians (healthier meal) and in a short-term study of products for the service at the tables (napkins, cutlery,
etc).
3. What are the roles of the POS system in forecasting at Exit Cafe?
Answer: The POS system is the way they catch the transaction data of each client. In each cafe they capture this
information and they report it daily to the Orlando corporate headquarters’ database. There the information is
treated to conclude a sales forecast.
4. Justify the weighting system used for evaluating managers for annual bonuses.
Answer: The weighting system is justified because it allows Todd to determine if the managers have met or
exceeded their targets. If so, then Todd computes the moving average and gives managers a bonus based on the
average.
5. Name several variables besides those mentioned in the case that could be used as good
predictors of daily sales in each café.
Answer: One variable Exit café could use is to monitor every meal that comes out of the kitchen on a given
day. On Fridays they may expect more customers than they would on a Tuesday. Being aware of what is
going on in that particular area will also help them. For example, if a concert or event is going on they could
expect more customers because there is a large crowd or less customers because people are all busy
attending the same event. If there is a local zoo or aquarium that is having a special on ticket prices, then
Exit Cafe could also offer a discount to those people such as “Bring us your Zoo/Aquarium ticket and you will
get 5$ off your meal”. This will bring more customers.
PROJECT MANAGEMENT AT TONDO HOSPITAL
The equivalent of a new kindergarten class is born every day at Tondo Hospital. With more than 13,000
births in the mid-2000s in a hospital designed 15 years earlier for a capacity of 6,500 births a year, the
newborn intensive care unit was stretched to the limit. Moreover, with continuing strong population
growth in central Manila, the hospital was often full. It was clear that new facilities were needed. After
much analysis, forecasting, and discussion, the management team decided to build a new 273-bed
building across the street from the existing hospital. But the facility had to be built following the
hospital’s Guiding Principles and its uniqueness as a health center dedicated to the specialized needs of
women and infants. Those Guiding Principles are: Family-centered focus, a healing environment where
privacy and dignity are respected, a sanctuary of caring that includes warm, serene surroundings with
natural lighting, sincere and dedicated staff providing the highest quality care, and patient-centered flow
and function.
The vice president of business development, Karl Magno, wanted a hospital designed from the inside
out by the people who understood the Guiding Principles, who knew most about the current system,
and who would use the new system, namely, the doctors and the nurses. Magno and his staff spend 13
months discussing expansion needs with this group, as well as with patients and the community, before
developing a proposal for the new facility. An administrative team created 35 user groups, which held
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over 1,000 planning meetings (lasting from 45 minutes to a whole day). They even created a “Supreme
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Court” to deal with conflicting views on the new hospital’s multifaceted issues.
Funding and regulatory issues added substantial complexity to this significant expansion, and Magno
was very concerned that the project would stay on time and within budget. Tom Crus, director of facility
development, was tasked as onsite manager of the P100 million project, overseeing ongoing
renovations, expansions, and other projects. The activities in the multiyear project for the new building
at Tondo Hospital are shown in the table below:
Expansion Planning and Tondo Hospital Construction Activities and Times
PRECEDENCE
ACTIVITY SCHEDULED TIME
ACTIVITY(IES)
1. Proposal and review 1 month -
2. Establish master schedule 2 weeks 1
3. Architect selection process 5 weeks 1
4. Survey whole campus and its needs 1 month 1
5. Conceptual architect’s plans 6 weeks 3
6. Cost estimating 2 months 2, 4, 5
7. Deliver plans to the board for consideration/decision 1 month 6
8. Surveys/regulatory review 6 weeks 6
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9. Construction manager selection 9 weeks 6
10. State review of need for more hospital beds
3.5 months 7, 8
(“Certificate of Need”)
11. Design drawings 4 months 10
12. Construction documents 5 months 9, 11
13. Site preparation/demolish the existing building 9 weeks 11
14. Construction start/building pad 2 months 12, 13
15. Relocate utilities 6 weeks 12
16. Deep foundations 2 months 14
17. Building structure in place 9 months 16
18. Exterior skin/roofing 4 months 17
19. Interior buildout 12 months 17
20. Building inspections 5 weeks 15, 19
21. Occupancy 1 month 20
*For simplification, assume each week = .25 months (i.e., 2 weeks = .5 month; 6 weeks = 1.5 months)
Questions (5 items x 10 points: 5 points for the solution, 5 points for the explanation):
1. Develop the network for planning and constructing the new hospital at Tondo.
2. What is the critical path, and how long is the project expected to take?
Answer: A. 1-3-5-6-8-10-11-12-14-16-17-18 = 36.75 months (3years, 9 moths)
B. 1-3-5-6-8-10-11-12-14-16-17-19-20-21 = 47months (3years - 11months)
3. Why is the construction of this 11-story building any more complex than an equivalent office
building?
Answer: The management team decided to build a new 273-bed building across the street from the existing
hospital.
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4. What percent of the whole project duration was spent in planning that occurred before the
proposal and reviews?
Answer: In planning that occurred prior to the proposal and reviews spent 44.95% duration in whole project.
5. What percent of the whole project duration was spent in planning that occurred before the
actual building construction?
Answer: In planning that occurred prior to the actual building construction spent 55.05% duration in whole
project
Rubric for grading the solutions:
CRITERIA POINTS
Complete solution with correct answer, layout/design, and proportion are correctly laid 5
out/sketched.
Last two (2) major steps of the solution and layout/design are incorrect. 4
Half of the solution and layout/design are correct. 3
First two (2) major steps of the solution and layout/design are correct. 2
First major step of the solution and layout/design are correct. 1
Rubric for grading the explanations/justifications:
CRITERIA EXCELLENT (5) GOOD (3) POOR (1) TOTAL
IDEAS AND The answer is The answer is The topic 5
ORGANIZATION clear and mainly focused needs to be
x1 focused. Writing and has some more well-
information good details and defined, or
based on fact. information. there are too
Specific Some examples many topics.
examples are are not The
appropriate and appropriate. sentences
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CRITERIA EXCELLENT (5) GOOD (3) POOR (1) TOTAL
developed. It The answers are make sense,
enhances and primarily but the order
showcases the organized in a needs to be
central ideas logical order. corrected.
and is arranged
logically.
REFERENCES
Heizer, J., Render, B., & Munson, C. (2020). Operations Management: Sustainability and Supply Chain
Management (13th ed.). Pearson Education Inc.
Krajewski, L. J., Malhotra, M. K., & Ritzman, L. P. (2018). Operations Management: Processes and Supply
Chains (12th ed.). Pearson Education Limited.
Schroeder, R., & Goldstein, S. M. (2020). Operations Management in the Supply Chain: Decisions and
Cases (8th ed.). McGraw-Hill Education.
Stevenson, W. J. (2020). Operations Management (14th ed.). McGraw Hill Education.
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