Questions 1.) The president of the Akron Zoo asked you to calculate the expected

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1.) The president of the Akron Zoo asked you to calculate the expected gate admittance figures and revenues for both 2006 and 2007. Would simple linear regression analysis be the appropriate forecasting technique?
2.) What factors other than admission price influence annual attendance and thus should be considered in the forecast?

Admission Fee (S) Year Attendance Adult Child Group 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 53,353 61,417 63,853 63,034 95,504 133,762 108,363 126,853 125,363 117,874 1.50 1.50 1.50 1.50 2.00 2.50 2.50 3.00 3.00 4.00 0.75 0.75 0.75 0.75 1.00 1.50 1.50 2.00 2.00 2.50 0.50 0.50 0.50 0.50 0.50 1.00 1.00 1.50 1.00 1.50

Explanation / Answer

1) Simple linear regression will not work in this case as the R2 value for the simple linear regression is very poor. It is as low as 0.775 and hence the explained variation in the forecast result will be not so great. A quadratic trendline added to the result has a better R2 value which is 0.817.

Hence using the equation y= -837.27x2+18407x+25932 which is the equation of the trendlinetmakes more sense than the regression equation which is y= 9197.309x-18304279.23

2) other factors which will influence the annual attendence and should be cobsidered while forecasting are:

a) Seasonality: since the demand depends on the weather there is some kind of seasonality involved hence in such cases it is better to calculate quarterly demand rather than annual demand. Seasonality coefficient must be calculated and the demand should be adjsuted according to seasonality.

b) Cyclicity or the business cycle which is hard to predict but must be kept at the back of the mind while forecasting. A major recession can hit the purchasing power of the families and hence impacting the forecast.

c) Any promotion offered by Akron should also be considered while forecasting. A discount during non peak season can change the demand and hence impact forecasting.

d) Any alternative source of entertainment like circus etc. can also affect the demand and hence to be considered.

e) Quality of the services offered by Akron for a longer period will also change the current demand.

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