Question 2

(a) Suppose you have recently joined a company as an intern. The company produces musical instruments like guitar, electric organs etc. Your job is to help the Operations Manager in production planning.

(i) The manager wanted to know whether to use projective forecasting models or regression-based forecasting models to predict the demand of musical instruments. Discuss your opinion about these methods? (8 marks)

(ii) Whatever be your suggestion, the manager decides to go for a regression model to predict future demands for the organs in coming years. Figure 1 shows selected summary output of the regression analysis based on previous 5 years' data. What would be the demand for the Organ in year 6 and year 10, based on the regression equation?

Organs
Multiple R	0.976416832
R Square	0.953389831
Adjusted R Square	0.937853107
Standard Error	6.055300708
Observations	5
	Coefficients
Intercept	-5
Year	15

Figure 1: Summary Output of the Regression Analysis Hint: The independent variable here is Year (1, 2, 3,....) (12 marks)