Question

More images for certain company produces and sells frozen pizzas to public schools throughout the eastern United States. Using a very aggressive marketing strategy, they have been able to increase their annual revenue by approximately $10 million over the past 10 years. But increased competition has slowed their growth rate in the past few years. The annual revenue, in millions of dollars, for the previous 10 years is shown.

Year Revenue

1. 8.43

2. 10.94

3. 13.08

4. 14.11

5. 16.21

6. 17.21

7. 18.37

8. 18.55

9. 18.50

10. 18.33

(a.) construct a time series plot, determine the appropriateness of the linear trend.

(b.) develop a quadratic trend equation that can be used to forecast revenue.

(c) Using the trend equation developed in part (b), forecast revenue (in millions of dollars) in year 11.

Answer 1

a)

The time series plot for Revenue data is obtained in excel by following this step,

Select the data values then INSERT> Recommended Charts> X Y Scatter > OK.

The Chart is obtained. The screenshot is shown below,

From the time series plot we can see that the revenue data follows quadratic pattern with order 2.

b)

The regression equation is defined as,

The regression analysis is done in excel by following steps

Step 1: Write the data values in excel. The screenshot is shown below

Step 2: Step 2: DATA > Data Analysis > Regression > OK. The screenshot is shown below,

Step 3: Select Input Y Range: 'y' column, Input X Range: 'x and x^2' column then OK. The screenshot is shown below,

The result is obtained. The screenshot is shown below,

The quadratic regression equation is,

c)

For year 11, X = 11, the forecast is,