The U.S. fireworks industry has experienced unprecedented growth during the past few years. Fireworks are a fairly seasonal item with a high proportion of revenue coming from "4th of July" sales. But revenue is also generated with New Year's celebrations, as well as various festivities throughout the year (concerts, sporting events, etc.). Data below from the past 3 years represent the industry revenue (millions of dollars) for the various defined seasons.

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4:17
The U.S. fireworks industry has experienced unprecedented growth during the past
few years. Fireworks are a fairly seasonal item with a high proportion of revenue
coming from "4th of July" sales. But revenue is also generated with New Year's
celebrations, as well as various festivities throughout the year (concerts, sporting
events, etc.). Data below from the past 3 years represent the industry revenue
(millions of dollars) for the various defined seasons.
#1
Season 1 corresponds to "4th of July" revenue.
Season 2 is the revenue from New Years.
Season 3 represents the revenue from the remainder of the year.
Year
Season 1
Season 2
Season 3
2019
$822
$154
$51
2020
$876
$165
$54
2021
S886
S166
$55
a. Create the following dummy variables in columns next to the appropriate data:
July-D =1 if Season 1, 0 otherwise
Jan-D-1 if Season 2, 0 otherwise
b. Create t to represent the time period. Thus, t=1 refers to the observation in
Season 1 of 2019; t= 2 refers to the observation in Season 2 of 2019; ... and t= 9
refers to the observation in Season 3 of 2021.
c. Use the Excel Data Analysis add-in to develop an estimated multiple regression
equation to forecast industry revenue using time period (f) and the dummy
variables (July-D and Jan-D) to account for any seasonal effects.
d. Write the estimated regression equation.
e. Based upon the seasonal effects in the data and the linear trend, compute each
seasonal forecast (Season 1, 2 and 3) for 2022 using the multiple regression
model.
Transcribed Image Text:4:17 The U.S. fireworks industry has experienced unprecedented growth during the past few years. Fireworks are a fairly seasonal item with a high proportion of revenue coming from "4th of July" sales. But revenue is also generated with New Year's celebrations, as well as various festivities throughout the year (concerts, sporting events, etc.). Data below from the past 3 years represent the industry revenue (millions of dollars) for the various defined seasons. #1 Season 1 corresponds to "4th of July" revenue. Season 2 is the revenue from New Years. Season 3 represents the revenue from the remainder of the year. Year Season 1 Season 2 Season 3 2019 $822 $154 $51 2020 $876 $165 $54 2021 S886 S166 $55 a. Create the following dummy variables in columns next to the appropriate data: July-D =1 if Season 1, 0 otherwise Jan-D-1 if Season 2, 0 otherwise b. Create t to represent the time period. Thus, t=1 refers to the observation in Season 1 of 2019; t= 2 refers to the observation in Season 2 of 2019; ... and t= 9 refers to the observation in Season 3 of 2021. c. Use the Excel Data Analysis add-in to develop an estimated multiple regression equation to forecast industry revenue using time period (f) and the dummy variables (July-D and Jan-D) to account for any seasonal effects. d. Write the estimated regression equation. e. Based upon the seasonal effects in the data and the linear trend, compute each seasonal forecast (Season 1, 2 and 3) for 2022 using the multiple regression model.
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