Trevor Harty, an avid mountain biker, always wanted to start a business selling
ID: 3292321 • Letter: T
Question
Trevor Harty, an avid mountain biker, always wanted to start a business selling top-of-the-line mountain bikes and other outdoor supplies. A little over 6 years ago, he and a silent partner opened a store called Hale and Harty Trail Bikes and Supplies. Growth was rapid in the first 2 years, but since that time, growth in sales has slowed a bit, as expected. The quarterly sales (in $1,000s) for the past 4 years are shown in the table below:
Year 1 Year 2 Year 3 Year 4
Quarter 1 274 282 282 296
Quarter 2 172 178 182 210
Quarter 3 130 136 134 158
Quarter 4 162 168 170 182
A - Develop a trend line using the data in the table. Use this to forecast sales for each quarter of year 5. What does the slope of this line indicate?
B- Use the multiplicative decomposition model to incorporate both trend and seasonal components into the forecast. What does the slope of this line indicate?
C- Compare the slope of the trend line in part (a) to the slope trend line for the decomposition model that was based on deseasonalized sales figures. discuss why these are so different and explain which one is best to use.
Explanation / Answer
Forecast
slope - if time increase by 1 unit (1 quarter ) , the sales decrease by amount of slope (as slope is negative)
SUMMARY OUTPUT Regression Statistics Multiple R 0.02816089 R Square 0.000793036 Adjusted R Square -0.07057889 Standard Error 58.651986 Observations 16 ANOVA df SS MS F Significance F Regression 1 38.22352941 38.22352941 0.011111312 0.917546 Residual 14 48160.77647 3440.055462 Total 15 48199 Coefficients Standard Error t Stat P-value Lower 95% Intercept 197.6 30.75736094 6.424478367 1.58851E-05 131.632 t -0.335294118 3.180850544 -0.105410208 0.91754572 -7.15754Related Questions
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