The file P16_61.xlsx contains data on a motel chain’s revenue and advertising.

a. Use these data and multiple regression to make predictions of the motel chain’s revenues during the next four quarters. Assume that advertising during each of the next four quarters is $50,000.

(Hint: Try using advertising, lagged by one period, as an explanatory variable. See the previous problem for an explanation of a lagged variable. Also, use dummy variables for the quarters to account for possible seasonality.)

b. Use simple exponential smoothing to make predictions for the motel chain’s revenues during the next four quarters. Experiment with the smoothing constant.

c. Use Holt’s method to make forecasts for the motel chain’s revenues during the next four quarters.
Experiment with the smoothing constants.

d. Use Winters’ method to determine predictions for the motel chain’s revenues during the next four quarters. Experiment with the smoothing constants.

e. Which forecasts from parts a to d would you expect to be the most reliable?