In: Advanced Math
South Shore Construction builds permanent docks and seawalls along the southern shore of Long Island. Although the firm has been in business only five 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 thousands of dollars: (Answer 1-3
1.Below is a simple linear regression analysis for this forecasting problem. Is this a valid model to use to forecast quarterly revenue for South Shore? Why or why not? Explain completely.
2.Based on the model in question 1, what is the forecast for Quarter 1 of Year 6?
3.Is there a seasonal trend in this data? Find the appropriate seasonal factor for Quarter 1 of Year 6 and apply it to get a new forecast for revenue in that quarter. Does this provide a better model than the one used in questions 1 and 2? Why or why not? Provide support for your answer (not necessarily numerical data).
SUMMARY OUTPUT |
||||||||
Regression Statistics |
||||||||
Multiple R |
0.555256 |
|||||||
R Square |
0.30831 |
|||||||
Adjusted R Square |
0.269882 |
|||||||
Standard Error |
106.0593 |
|||||||
Observations |
20 |
|||||||
ANOVA |
||||||||
df |
SS |
MS |
F |
Significance F |
||||
Regression |
1 |
90249.64 |
90250 |
8.02321 |
0.0110388 |
|||
Residual |
18 |
202474.4 |
11249 |
|||||
Total |
19 |
292724 |
||||||
Coefficients |
Standard Error |
t Stat |
P-value |
Lower 95% |
Upper 95% |
Lower 95.0% |
Upper 95.0% |
|
Intercept |
37.67895 |
49.26788 |
0.7648 |
0.45431 |
-65.829032 |
141.187 |
-65.829032 |
141.1869 |
X Variable 1 |
11.64962 |
4.112803 |
2.8325 |
0.01104 |
3.0089449 |
20.2903 |
3.00894485 |
20.2903 |