Business Forecasting 1st Edition John E. Hanke - Solutions

19. The number of employees (X) and profits per employee (Y) for n = 16 publishing firms are given in Table P-19. Employees are recorded in thousands and profits per TABLE P-18 Year Time Copy Centers 1993 1 1 1994 2 2 1995 3 2 1996 4 6 1997 5 10 1998 6 16 1999 7 25 2000 8 41 2001 9 60 2002 10 97
18. On The Double, a chain of campus copy centers, began operations with a single store in 1993. The number of copy centers in operation, Y, is recorded for 14 con- secutive years in Table P-18.a. Plot number of copy centers versus year. Has On The Double experienced lin- ear or exponential
17. Outback Steakhouse grew explosively during its first years of operation. The num- bers of Outback Steakhouse locations for the period 1988-1993 are given below. Year 1988 1989 1990 1991 1992 1993 Number of locations 2 9 23 49 87 137 Source: Outback Steakhouse.a. Does there appear to be linear
16. Table P-16 contains data for 23 cities on newsprint consumption (Y) and the number of families in the city (X) during a particular year.a. Plot newsprint consumption against number of families as a scatter diagram.b. Is a simple linear regression model appropriate for the data in Table P-16?
15. Player costs (X) and operating expenses (Y) for major league baseball teams for the 1990–1991 season are given in Table P-15.TABLE P-15 Team Player Costs X ($ millions) Operating Expenses Y ($ millions) 1 29.8 59.6 2 36.0 72.0 3 35.2 70.4 4 29.7 62.4 5 35.4 70.8 6 15.8 39.5 7 18.0 60.0 8 23.2
14. The data in Table P-14 were collected as part of a study of real estate property evaluation. The numbers are observations on (in thousands of dollars) on the city assessor’s books and (selling price in thousands of dollars) for parcels of land that sold in a particular calendar year in a
13. Harry Daniels is a quality control engineer for the Specific Electric Corporation. Specific manufactures electric motors. One of the steps in the manufacturing process involves the use of an automatic milling machine to produce slots in the shafts of the motors. Each batch of shafts is tested,
12. Consider the population of 140 observations that are presented in Table P-12. The Marshall Printing Company wishes to estimate the relationship between the number of copies produced by an offset printing technique (X) and the associated direct labor cost (Y). Select a random sample of 20
11. Ed Bogdanski, owner of the American Precast Company, has hired you as a parttime analyst. Ed was extremely pleased when you determined that there is a positive relationship between the number of building permits issued and the amount of work available to his company. Now he wonders if it is
10. Evaluate the following statements:a. A high means a significant regression.b. A very large sample size in a regression problem will always produce useful results.
9. The ABC Investment Company is in the business of making bids on investments offered by various firms that want additional financing. ABC has tabulated its bids on the last 25 issues in terms of their percentage of par value. The bids of ABC’s major competitor, as a percentage of par value, are
8. In a regression of investment on the interest rate, the results in Table P-8 were observed over a 10-year period.a. Is the relationship between these variables significant?b. Can an effective prediction equation be developed?c. If the average interest rate is 4% five years from now, can yearly
7. Information supplied by a mail-order business for 12 cities is shown in Table P-7.a. Determine the fitted regression line.b. Calculate the standard error of the estimate.c. Determine the ANOVA table.d. What percentage of the variation in mail orders is explained by the number of catalogs
6. Andrew Vazsonyi is the manager of the Spendwise supermarket chain. He would like to be able to forecast paperback book sales (books per week) based on the TABLE P-4 Time Required for Checkout (minutes) Value of Purchase ($) Time Required for Checkout (minutes) Value of Purchase ($) 3.6 30.6 1.8
5. Lori Franz, maintenance supervisor for the Baltimore Transit Authority, would like to determine whether there is a positive relationship between the annual mainte- nance cost of a bus and its age. If a relationship exists, Lori feels that she can do a better job of forecasting the annual bus
4. The times required to check out customers in a supermarket and the correspond- ing values of purchases are shown in Table P-4. Answer partsa, b,e, and f of Problem 3 using these data. Give a point forecast and a 99% interval forecast for Y if X = 3.0.
3. Consider the data in Table P-3 where X = weekly advertising expenditures and Y = weekly sales.a. Does a significant relationship exist between advertising expenditures and sales?b. State the prediction equation.c. Forecast sales for an advertising expenditure of $50.d. What percentage of the
2. AT&T (American Telegraph and Telephone) earnings in billions of dollars are estimated using GNP (gross national product). The regression equation is .078.06X, where GNP is measured in billions of dollars.a. Interpret the slope.b. Interpret the Y-intercept.TABLE P-3 Y ($) X ($) Y ($) X ($) 1,250
1. Which of the following situations is inconsistent?a. 499.21X and r = .75 =b. 100+.9X and r = -.70 =c. -20+1X and r = .40 =d. Y7 4X and r = -.90 =
4. Compute the residual autocorrelations. Given the residual autocorrelations and the forecasts, should Mary be pleased with the decomposition analysis of total billable visits? Explain.
3. Interpret the trend component for Mary. What did she learn from the seasonal indexes?
2. Perform a multiplicative decomposition of total billable visits, save the residuals, and generate forecasts of visits for the next 12 months, using February FY2003–04 as the forecast origin.
1. Write a brief memo to Mary explaining decomposition of a time series.
3. Compute the residual autocorrelations. Examining the residual autocorrelations and the forecasts of sales for the remainder of 2003, should Jame change his thinking about the value of decomposition analysis? Explain.
2. What did Jame learn about the trend in sales? What did the seasonal indexes tell him?
1. Perform a multiplicative decomposition of the Surtido Cookie sales data, store the residuals, and generate forecasts of sales for the remaining months of 2003.
2. Write a memo to Mr. DeCoria summarizing the important insights into changes in emergency road service call volume that you discovered from your time series decomposition analysis.
1. Perform a time series decomposition on the AAA emergency road service calls data.
3. Forecast sales for October 2002 using the same procedure as in part 2.
2. Using the forecasts from part 1, forecast sales for the first nine months of 2002 by adding or subtracting the appropriate seasonal index in Table 11. Are these forecasts accurate when compared with the actual values?
1. Using the data through 2001 in Table 12, develop a model to forecast the seasonally adjusted sales data and generate forecasts for the first nine months of 2002.
3. Disregarding Seattle, how much volume would John have to realize from his shirt-making machine to make both January and February “average”?
2. Assume that John will do exactly twice as much business in Seattle as Spokane next year. Determine the Seattle seasonal indexes that would be ideal to balance out the monthly revenues for Mr. Tux.
1. Suppose John’s banker asked for two sentences to show his boss that would justify John’s request to make extra loan payments in some months and no payments in others. Write these two sentences.
6. If you had to limit your choice to one of the models in Questions 2 and 4, identify the model you would use for your business planning in 2007, and discuss why you selected that model over the others.
5. Calculate the MAD values for the two models that visually appear to give the best fits (the most accurate one-step-ahead forecasts).
4. Smooth the time series using Holt's linear expo- nential smoothing with three sets of smoothing constants: , and . Plot the three sets of smoothed values on the time series graph. Generate forecasts through the end of the third year for each of the trend-adjusted exponential smoothing
3. Estimate the seasonal adjustment factors for each month by dividing the average demand for corresponding months by the average of the corresponding trend-line forecasts. Plot the fitted values and forecasts for 2007 given by Trend X Seasonal.
2. Develop a trend-line equation using linear regression and plot the results.
1. Plot the data on a two-year time horizon from 2005 through 2006. Connect the data points to make a time series plot.
28. Refer to Problem 27.The default multiplicative decomposition in Minitab assumes a linear trend. Fit and plot a linear trend line to the Wal-Mart sales. Is a linear trend appropriate for these data? If not, can you suggest a trend curve that might be appropriate? Fit your suggested trend curve
27. Table P-27 gives quarterly sales (in millions of dollars) for Wal-Mart Stores from 1990–2004. Use Minitab to do a multiplicative decomposition of the Wal-Mart sales time series for the years 1990–2003 and generate forecasts for the four quarter of 2004. Does a multiplicative decomposition
26. Refer to Problem 25. The default multiplicative decomposition in Minitab assumes a linear trend. Plot the employed men data in Table P-25 and examine the years 1993–2000 and 2001–2003. Is a linear trend appropriate? If not, can you suggest a trend curve that might be appropriate? Fit your
25. Table P-25 contains the number (in thousands) of men 16 years of age and older who were employed in the United States for the months from January 1993 to October 2003. Use Minitab to do a multiplicative decomposition of these data and generate forecasts for the next 12 months. Does a
23. In the base period of June, the price of a selected quantity of goods was $1,289.73. In the most recent month, the price index for these goods was 284.7. How much would the selected goods cost if purchased in the most recent month? 24. Deflate the dollar sales volumes in Table P-24 using the
22. What is the purpose of deflating a time series that is measured in dollars?
21. What is the present position of the business cycle? Is it expanding or contracting? When will the next turning point occur?
20. Discuss the performance of the composite index of leading indicators as a barometer of business activity in recent years.
19. The adjusted seasonal indexes presented in Table P-19 reflect the changing volume of business of the Mt. Spokane Resort Hotel, which caters to family tourists in the summer and skiing enthusiasts during the winter months. No sharp cyclical variations are expected during 2007.TABLE P-24 Sales
18. Table P-18 contains data values that represent the monthly sales (in billions of dollars) of all retail stores in the United States. Using the data through 1994, perform a decomposition analysis of this series. Comment on all three components of the series. Forecast retail sales for 1995 and
17. The monthly gasoline demand (in thousands of barrels/day) for Yukong Oil Company of South Korea for the period from January 1986 to September 1996 is contained in Table P-17.a. Plot the gasoline demand time series. Do you think an additive or a multiplicative decomposition would be appropriate
16. Table P-16 contains the quarterly sales (in millions of dollars) for the Disney Company from the first quarter of 1980 to the third quarter of 1995.a. Perform a multiplicative decomposition of the time series consisting of Disney’s quarterly sales.b. Does there appear to be a significant
15. Construct a table similar to Table P-14 with the natural logarithms of monthly sales. For example, the value for January 2000 is .a. Perform an additive decomposition of ln(sales), assuming the model Y = T + S + I.TABLE P-14 Month 2000 2001 2002 2003 2004 2005 2006 January 154 200 223 346 518
14. The monthly sales of the Cavanaugh Company, pictured in Figure 1 (bottom), are given in Table P-14.a. Perform a multiplicative decomposition of the Cavanaugh Company sales time series, assuming trend, seasonal, and irregular components.b. Would you use the trend component, the seasonal
13. The quarterly sales levels (measured in millions of dollars) for Goodyear Tire are shown in Table P-13. Does there appear to be a significant seasonal effect in these sales levels? Analyze this time series to get the four seasonal indexes and determine the extent of the seasonal component in
12. In preparing a report for June Bancock, manager of the Kula Department Store, you include the statistics from last year’s sales (in thousands of dollars) shown in Table P-12. Upon seeing them, Ms. Bancock says, “This report confirms what I’ve been telling you: Business is getting better
11. A large resort near Portland, Maine, has been tracking its monthly sales for several years but has never analyzed these data. The resort computes the seasonal indexes for its monthly sales.Which of the following statements about the index are correct?a. The sum of the 12 monthly index numbers,
10. The following specific percentage seasonal indexes are given for the month of December: TABLE P-12 Month Sales ($1,000s) Adjusted Seasonal Index (%) January 125 51 February 113 50 March 189 87 April 201 93 May 206 95 June 241 99 July 230 96 August 245 89 September 271 103 October 291 120
9. The expected trend value for October is $850. Assuming an October seasonal index of 1.12 (112%) and the multiplicative model given by Equation 2, what would be the forecast for October?
8. Assume the following specific percentage seasonal indexes for March based on the ratio-to-moving-average method: 102.2 105.9 114.3 122.4 109.8 98.9 What is the seasonal index for March using the median?102.2 105.9 114.3 122.4 109.8 98.9 TABLE P-6 Capital Spending ($ billions), 1977–1993 Year
7. A large company is considering cutting back on its TV advertising in favor of busi- ness videos to be given to its customers. This action is being considered after the company president read a recent article in the popular press touting business videos as today's "hot sales weapon." One thing
6. Value Line estimates of sales and earnings growth for individual companies are derived by correlating sales, earnings, and dividends to appropriate components of the National Income Accounts such as capital spending. Jason Black, an analyst for Value Line, is examining the trend of the capital
5. What are some basic forces that affect the seasonal component of most variables?
4. What kind of trend model should be used in each of the following cases?a. The variable is increasing by a constant rate.b. The variable is increasing by a constant rate until it reaches saturation and levels out.c. The variable is increasing by a constant amount.
3. What are some basic forces that affect the trend-cycle of most variables?
2. Explain when a multiplicative decomposition may be more appropriate than an additive decomposition.
1. Explain the concept of decomposing a time series.
4. Use Karin’s historical monthly average suggestion to construct forecasts for the remaining months of 2003. Which forecasts, yours or Karin’s, do you prefer? Why?
3. Select and justify an appropriate smoothing procedure for forecasting future cookie sales and produce forecasts for the remaining months of 2003.
2. Are the autocorrelations consistent with the pattern(s) Jame observed in the time series plot? .
1. What pattern(s) did Jame observe from a time series plot of Surtido cookie sales?
4. Do you think additional medical staff might be needed to handle future demand? Write a brief report summarizing Mary’s data analysis and the implications for additional staff.
3. Given the results in Question 2, do you think it is likely another forecasting method would generate “better” forecasts? Discuss.
2. Fit an appropriate smoothing procedure to Mary’s data, examine the residual autocorrelations, and generate forecasts for the remainder of FY2003–04. Do these forecasts seem reasonable?
1. What did Mary’s autocorrelation analysis show?
6. Many orders consist of more than one item (unit). Would it be better to focus on number of units and contacts per unit to get a forecast of contacts? Discuss.
5. Pat has access to a spreadsheet with historical actual contacts. He is considering forecasting contacts directly instead of multiplying forecasts of orders and contacts per order to get a forecast. Does this seem reasonable? Why?
4. Use the results for Questions 2 and 3 to generate forecasts of contacts for the next four months.
3. Fit an appropriate smoothing procedure to the contacts per order time series and generate forecasts for the next four months. Justify your choice.
2. Fit an appropriate smoothing procedure to the orders time series and generate forecasts for the next four months. Justify your choice.
1. What did Pat and his team learn about the data patterns for orders and contacts per order from the time series plots and autocorrelation functions?
1. Downtown Radiology’s accountant projected that revenue would be considerably higher than that provided by Professional Marketing Associates. Since ownership interest will be made available in some type of public offering, Downtown Radiology’s management must make a decision concerning the
3. Which data set and forecasting model should Julie use to forecast sales for 1996?
2. Do any of the forecasting models studied in this chapter work with the actual Murphy Brothers’ sales data?
1. Do any of the forecasting models studied in this chapter work with the national sales data?
6. Determine the adequacy of the forecasting model you have chosen.
5. Choose the best model and forecast new clients for the rest of 1993.
4. Evaluate these forecasting methods using the forecast error summary measures.
3. Develop an exponential smoothing procedure to forecast the number of new clients seen by CCC for the rest of 1993.
2. Develop a moving average model to forecast the number of new clients seen by CCC for the rest of 1993.
1. Develop a naive model to forecast the number of new clients seen by CCC for the rest of 1993.
4. Although not calculated directly in Minitab, the MPE (mean percentage error) measures forecast bias. What is the ideal value for the MPE? What is the implication of a negative sign on the MPE?
3. Although disappointed with his initial results, this may be the best he can do with smoothing methods. What should John do, for example, to determine the adequacy of the Winters’ forecasting technique?
2. John used the Minitab default values for α,b, and g. John thinks there are other choices for these parameters that would lead to smaller error measurements. Do you agree?
1. Summarize the forecast error level for the best method John has found using Minitab.
20. Table P-20 contains quarterly sales ($MM) of The Gap for fiscal years 1980–2004. Plot The Gap sales data as a time series and examine its properties. The objective is to generate forecasts of sales for the four quarters of 2005. Select an appropriate smoothing method for forecasting and
19. This problem was intentionally excluded from this text.
18. Table P-18 contains the number of severe earthquakes (those with a Richter scale magnitude of 7 and above) per year for the years 1900–1999.a. Use Minitab to smooth the earthquake data with moving averages of orders , 10, and 15. Describe the nature of the smoothing as the order of the
17. Consider the gasoline purchases for the Spokane Transit Authority given in Table 2. In Example 3, a five-week moving average is used to smooth the data and generate forecasts.a. Use Minitab to smooth the Spokane Transit Authority data using a four-week moving average. Which moving average
16. A job-shop manufacturer that specializes in replacement parts has no forecasting system in place and manufactures products based on last month’s sales. Twentyfour months of sales data are available and are given in Table P-16.TABLE P-14 Triton Sales per Share, 1974–1999 Year Sales per

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Business Forecasting 1st Edition John E. Hanke - Solutions

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