Running head: Las Vegas Visitors 1

Executive Summary
Dumitri Mironescu is the owner of a limousine company in Las Vegas which currently
consists of 17 vehicles. During the year of 2012, Dumitru decided that it was time to replace
three of the companys 17 vehicles. In addition, Dumitru wanted to add two new vehicles to his
fleet of limousines. Dumitru submitted a business plan to the bank to finance his purchases. After
reviewing his business plan, the bank was not comfortable with the companys revenue forecast
and needed further convincing. Dumutri got help from his son to prepare a forecast for visitors to
Las Vegas in 2013. Revenue for the limousine service is driven by the amount of visitors to the
area. Therefore, in order to forecast the companys revenue, Denis will have to prepare a forecast
for visitors to Las Vegas using different forecasting methods. The best forecast method will be
chosen and will help determine the growth of revenue; and ultimately decide whether Dumitru
should replace three vehicles as well as add two additional vehicles to his fleet.
Background
In 1983, Dumitru Mironescu and his family fled Romania and settled in Las Vegas. In
order to help his family survive, Dumitru had given up ideas of furthering his education and took
a job at a major hotel as a parking attendant until he learned to speak English. His incredible
attention to detail and friendly interaction with everyone was noticed. Eventually his hard
worked paid off and he was offered the position as the driver for the hotel limousine service.
After a few years of driving limousines for the hotel, Dumitru and his friend David, put
together all their money and bought their own used vehicle to start a limousine service. Since
then, Dumitru and Davids limousine service has been fairly profitable and is currently one of the
best limousine services in Las Vegas, with a fleet of 17 vehicles. In 2012, Dumitru decided it
was time to replace three of his oldest vehicles as well as expand his fleet by adding two
2
Las Vegas Visitors

additional new vehicles. Dumitri submitted a business plan to the bank for them to finance his
purchases. However, the Bank was not comfortable with his revenue forecast. As a result, he
asked for help from his son Dennis, an MBA student. Denis knew that the revenues of limousine
services are driven by the amount of visitors to Las Vegas.
Problem
Denis has to prepare a forecast for the number of visitors to Las Vegas in order to prove
that revenue for Dumitrus limousine service will grow in 2013.
Analysis
Revenue for Dumitru limousine services is driven by the number of visitors to Las Vegas.
In order to predict visitors to Las Vegas in 2013, previous data of visitors to Las Vegas is used
along with different analytical business models such as; time series, runs test, regression model,
moving average forecast simple, Holtz and winters exponential smoothing forecasts. Time
series gives us an idea about the trends in visitors to Las Vegas. On the other hand, runs test is
used to test the
randomness in
observation. The
runs test in this
case shows that
the observation is
randomly
distributed (see
runs test in excel
document in appendices).
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
16
1
1
1
6
2
1
2
6
3
1
3
6
4
1
4
6
5
1
5
6
6
1
6
6
7
1
7
6
8
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8
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9
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1
0
1
1
0
6
1
1
1
1
1
6
1
2
1
1
2
6
1
3
1
Observation #
Time Series of Visitors / Data Set #1
3
Las Vegas Visitors


Furthermore, a series of forecasts were ran using forecasting tools and methods.
Forecasting methods such as regression model, moving average forecast simple, Holtz and
winters exponential smoothing forecasts were used in order to determine the future estimated
number of visitors Las Vegas. These allows us to determine future revenue and support
Dumitrus decisions to replace vehicles and or expand the number of vehicles.
After making a series of forecast, it is decided that out of all the other forecasting
methods winters exponential smoothing forecast is best in determining visitors to Las Vegas.
Winters exponential smoothing forecast has a lowest absolute error than that of the other
forecast methods (see forecasts in excel document in appendices). The trends in the forecast
model shows very small growth rates in the amount of visitors to Las Vegas. Forecasts also
shows that small growth rates are equipped with seasonal highs and lows. The following graphs
below are graphs generated from winters exponential smoothing forecast model. From the
Forecast and Original Observations graph it is noticed that forecast does not deviate greatly
from the original.
4
Las Vegas Visitors



0.00
500000.00
1000000.00
1500000.00
2000000.00
2500000.00
3000000.00
3500000.00
4000000.00
J
a
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2
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2
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3
Forecast and Original Observations
Visitors
Forecast
0.00
500000.00
1000000.00
1500000.00
2000000.00
2500000.00
3000000.00
3500000.00
4000000.00
J
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2
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2
Original Observations
5
Las Vegas Visitors


Conclusion & Recommendations
In conclusion, it is recommended that Denis use winters exponential smoothing forecast
to forecast the number of visitors to Las Vegas as this predictive forecast model has the lowest
absolute error of all the other forecasts model.
After running forecast models, it is predicted that visitors to Las Vegas will experience
small growth with seasonal highs and lows in the foreseeable future. Dumitru is seeking financial
assistance from the bank to purchase five vehicles; three to replace his three oldest ones and two
additional ones. Therefore, since there will be little growth in visitors to the area, I recommend
that that Dumitru only replace his three oldest vehicles and do not purchase two additional
vehicles to add to his limousine fleet at the current moment.



-250000.00
-200000.00
-150000.00
-100000.00
-50000.00
0.00
50000.00
100000.00
150000.00
200000.00
250000.00
300000.00
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p
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2
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F
e
b
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J
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2
Forecast Errors