Answered: Use the following dummy variables to…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

1.) Use the following dummy variables to develop an estimated regression equation to account for seasonal effects only in the data. Qtr1 = 1 if Quarter 1, 0otherwise; Qtr2 = 1 if Quarter 2, 0 otherwise, Qtr3 = 1 if Quarter 3, 0otherwise. Based only on the seasonal effects in the data, compute estimates of quarterly sales for year 6.
a. Report the estimate of sales for Year 6 Quarter 1. (Enter a whole value.)
b. Report the estimate of sales for Year 6 Quarter 4. (Enter a whole value.)
2.) Let Period t = 1 refer to the observation in quarter 1 of year 1; Period t = 2refer to the observation in quarter 2 or year 1; … and Period t = 20 refer to the observation in quarter 4 of year 5. Using the dummy variables defined in part (b) and Period (t), develop an estimated regression equation to account for seasonal effects and any linear trend in the time series. Based upon the seasonal effects in the data and linear trend, compute the estimates of quarterly sales for year 6.
a. Report the estimate of sales for Year 6 Quarter 1. (Round to a whole number.)
b. Report the estimate of sales for Year 6 Quarter 4. (Round to a whole number.)

South Shore Construction builds permanent docks and seawalls along the southern shore of
Long Island, New York. Although the firm has been in business only 5 years, revenue has
increased from $308,000 in the first year of operation to $1,084,000 in the most recent year.
The following data show the quarterly sales revenue in thousand of dollars.
Year
1
2
3
4
5
Quarter Revenue
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
20
100
175
13
37
136
245
26
75
155
326
48
92
202
384
82
176
282
445
181

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Let Period t=1 refer to the observation in quarter 1 of year 1; Period t=2 refer to the observation in quarter 2 of year 1; ... and Period t=20 refer to the observation in quarter 4 of year 5. Using the dummy variables defined in part (b) and Period (t), develop an estimated regression equation to account for seasonal effects and any linear trend in the time series. Based upon the seasonal effects on the data and linear trend, compute the estimates of quarterly sales for year 6.

Report the estimate of sales for Year 6: Quarter 1, Quarter 2, Quarter 3, and Quarter 4

Round to a whole number

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