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The following data contains the monthly number of airlines tickets sold by a travel agency for four years. Month Year Tickets January 1 605 February

The following data contains the monthly number of airlines tickets sold by a travel agency for four years.

Month

Year

Tickets

January

1

605

February

1

647

March

1

636

April

1

612

May

1

714

June

1

765

July

1

698

August

1

615

September

1

588

October

1

685

November

1

711

December

1

664

January

2

630

February

2

696

March

2

670

April

2

671

May

2

724

June

2

787

July

2

724

August

2

651

September

2

589

October

2

697

November

2

750

December

2

705

January

3

664

February

3

704

March

3

691

April

3

672

May

3

753

June

3

787

July

3

751

August

3

695

September

3

643

October

3

724

November

3

803

December

3

705

January

4

720

February

4

757

March

4

707

April

4

692

May

4

828

June

4

827

July

4

763

August

4

710

September

4

673

October

4

793

November

4

852

December

4

710

Our goal is to build a regression model to predict the demand for the following 12 months.

a) (2 pts) Does a linear trend appear to fit these data well? Explain why or why not. Reference any tables/figures that you need to make your point.

b) (5+2+2 = 9 pts) Build a linear trend model or nonlinear trend regression model (depending on your answer in part a). Do not add a seasonality factor to this model. To validate your model, use the last 12 months as a validation data set.

  1. Copy and paste your R code and display the regression output.
  2. What are the RMSE and MAPE of the trend model based on the validation data? Discuss the overall performance of you model.
  3. Fill in the table with your predictions for the following 12 months.

Month

Year

Tickets (Prediction)

January

5

February

5

March

5

April

5

May

5

June

5

July

5

August

5

September

5

October

5

November

5

December

5

c) (2 pts) Is there evidence of some seasonal pattern in the sales data? If so, characterize the seasonal pattern (monthly, quarterly, or yearly).

d) (5+2+2= 9 pts) Build a regression model with trend and seasonality. To validate your model, use the last 12 months as a validation data set.

  1. Copy and paste your R code and display the regression output.
  2. What are the RMSE and MAPE of the trend model based on the validation data? Discuss the overall performance of you model.
  3. Fill in the table with your predictions for the following 12 months.

Month

Year

Tickets (Prediction)

January

5

February

5

March

5

April

5

May

5

June

5

July

5

August

5

September

5

October

5

November

5

December

5

e) (3 pts) Between the two models (part b and part d), which model will you use? Explain your answer.

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