% Seat % Average Fare Discount Year Quarter Occupancy 1 1 63 21 2 75 34 3 76 18 4 58 26 1 59 18 2 62 40 3 81 25 4 76 30 3 1 65 23 2 70 28 3 78 30 4 69 35 1 59 20 2 61 35 3 83 26 4 71 30 5 1 60 25 2 66 37 3 86 25 74 30
Arrow Air is a regional East Coast airline. It has collected data
for the percentage of available seats occupied on its flights for
four quarters—(1) January–March, (2) April–June, (3)
July–September, and (4) October–December—for the past five
years. The company also has collected data for the average per-
centage fare discount for each of these quarters as follows:
Develop a seasonally adjusted forecast model for seat
occupancy. Forecast seat occupancy for year 6 (using a
linear trend line forecast estimate for seat occupancy in
year 6).
b. Develop linear regression models relating seat occu-
pancy to discount fares to forecast seat occupancy for
each quarter in year 6. Assume a fare discount of 20%
for quarter 1, 36% for quarter 2, 25% for quarter 3, and
30% for quarter 4.
c. Compare the forecasts developed in parts (a) and (b)
and indicate which one appears to be the best.a
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