Bookshelf Home | Contents | Index | PDF

## Forecasting Product Consumption

The quantity of most products to be used at an event is normally entered in the product's line item quantity field. However, for some products, the quantity of the product used, which is used to forecast revenue, is calculated based on the number of attendees.

For example, if a guest asks for coffee provided at a function for a specified number of guests, the hotel administrator would know from experience that approximately two out of five people drink coffee at such an event. In this manner, the hotel administrator may forecast the consumption for the product. This can help when forecasting the amount of revenue expected from this product according to the number of guests that use the product.

NOTE:  If a quantity is entered for a line item, then the line item value is used to calculate revenue rather than product consumption forecasting.

This task is a step in Process of Setting Up Products and Assets.

To forecast the consumption of a product

1. Navigate to the Administration - Product screen > Products list.
2. In the Products list, click New and Release to create a new product record.

In the new record, complete the fields in the following table.

Field

Forecast Qty

Select this flag to allow product consumption forecasting. If this field is not selected, then the line item quantity is used to forecast the revenue for the item instead of product consumption forecasting.

UoM

The unit of measure by which the product is sold.

Consumption UoM

Indicates the unit of measure for actual consumption by the attendee. For example, coffee may be for sale by the gallon to a function but the attendee will consume cups of coffee.

UoM Conversion Factor

The ratio of Consumption UoM to Product UoM. For example, if there were 20 cups of coffee in 1 gallon of coffee, then the ratio is 20:1, and the conversion factor is 20.

Consumption Factor

Defines the expected Consumption UoM of the product. For example, if each attendee was to consume 2 cups of coffee, then the Consumption Factor is 2.

% Participation

The percentage of the attendees that are expected to consume the product. Express this as a fraction of 1. For example, if 80% are to consume the product, then enter 0.8 to this field.

3. Complete the remaining fields and save the record.

NOTE:  In some cases, the percentage participation may be different from property to property. For example, in colder states, people may be more likely to drink hot coffee than in warmer states. In this instance, it is necessary to create different products with different values in the % Participation field.

#### Example of How Product Consumption Forecasting Works

The following example will attempt to illustrate how consumption forecasting works. Assume that the following values are entered for the coffee:

• Expected number of attendees = 100
• Coffee Price = \$10 per gallon
• 20 cups = 1 Gallon (UoM Conversion factor = 20)
• Consumption Factor = 2 cups of coffee per person
• Percentage Participation = 80%

The calculation would be as follows:

Number of attendees to consume product equals 100 X 0.8 = 80

Number of cups consumed equals 80 X 2 = 160

Number of gallons used equals 160 / 20 = 8

Forecasted Revenue = 8 X 10 = \$80