CH_03_10th_Edition

# CH_03_10th_Edition - Forecasting CHAPTER 3 FORECASTING...

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Forecasting CHAPTER 3 FORECASTING PROBLEMS P1. The data below consist of the closing price of the common stock of the American Telephone and Telegraph Corporation on 10 recent trading days. Time(t ) Price Time(t) Price 1 \$24.10 6 \$22.73 2 23.80 7 22.60 3 23.39 8 21.76 4 22.90 9 22.14 5 22.10 10 21.69 a. Using a five-period moving average, forecast the price of the stock for period 10. b. What is the error of the forecast in #1-a? c. Using a five-period moving average, forecast the price of the stock for period 11. P2. A product is manufactured in distinct batches of various sizes. The cost accountant wished to obtain an equation to use for estimating the cost of a batch. He obtained data on a number of batches, consisting of the size of the batch, measured in number of pieces, and the total cost of the batch, consisting of the setup cost and the variable costs of labor, material, etc. Costs are stated in thousands of dollars. Size of Cost of Batch Batch 20 \$1.4 30 3.4 40 4.1 50 3.8 70 6.7 80 6.6 100 7.8 120 10.4 150 11.7 a. Which is the dependent variable? The independent variable? b. Draw the scatterplot of this data. Does a straight line look like a reasonable fit? c. Obtain ∑ x 2 , ∑xy, and ∑ y 2 . d. What is the value of the slope of the regression line that best fits this data? e. What is the interpretation of the slope? f. What is the value of the y intercept? g. What is the interpretation of the y intercept? 1

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h. Estimate the cost of a batch of 125 pieces. i. What is the value of the coefficient of correlation? Does it appear to indicate a high degree of association between the size of the batch and the cost? j. What is the value of r 2 ? P3. The president of the Rich and Greene College of Business Administration wishes to forecast the enrollment for next fall. The enrollment is measured in Full Time Equivalents (FTE), which represent the number of full-time students, which is equivalent to the existing mixture of full-time and part-time students. Data representing the fall enrollment for the past ten years is given below: time(t ) Enrollmen t 1 907 2 981 3 1014 4 1015 5 1050 6 1071 7 1123 8 1118 9 1175 10 1216 a. Draw a scatterplot. Does the data appear to contain a linear trend? b. Obtain the ∑ t , ∑ y , and ∑ ty . c. What is the value of the slope? d. What is the interpretation of the slope? e. What is the value of the y intercept? a. What is the interpretation of the y intercept? b. Forecast the enrollment for next fall. P4. The table below contains data on the monthly amount, in millions of dollars, which was spent by "leading national advertisers" for advertising apparel and accessories in magazines, in four recent years. Year
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## This note was uploaded on 04/20/2011 for the course TOM 301 taught by Professor Williamcosgrove during the Spring '08 term at Cal Poly Pomona.

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CH_03_10th_Edition - Forecasting CHAPTER 3 FORECASTING...

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