At the end of the first fiscal quarter, which ended on the last day of last mont

Question

At the end of the first fiscal quarter, which ended on the last day of last month, the research team at Finer Diner computed the following model as a means of predicting monthly gross revenues:

Gross revenues (Y) = 618.4 + 282.68(Advertising Expenditures) + 95.43(Number of Nights with Live Entertainment)

Y = Gross revenues (monthly)

X1 = Advertising Expenditures (monthly)

X2 = Number of Nights with a Band Present (monthly)

Calculated p-values for Advertising Expenditures and Number of Nights with Live Entertainment are 0.00005 and 0.35 respectively.

Currently, the restaurant spends $500 per month on advertising and has live entertainment fifteen nights per month.

Based on the current model and p-values:

Predict gross revenues if the restaurant raised monthly advertising expenditures by 15%, 25%, and 50%.

Predict gross revenues if the restaurant provided live entertainment 12 nights per month, 20 nights per month, and 24 nights per month

Identify goals of 15% increase in gross revenues for the next fiscal month, a 25% increase in monthly gross revenues for the current quarter, and a 50% increase in monthly gross revenues at the end of this fiscal year.

Predict changes in advertising expenditures and how many nights live entertainment is offered that will lead to meeting the goals.

IIlustrate potential strategies to accomplish your proposed increases.

Explanation / Answer

Gross revenues (Y) = 618.4 + 282.68(Advertising Expenditures) + 95.43(Number of Nights with Live Entertainment)

Y = Gross revenues (monthly)

X1 = Advertising Expenditures (monthly)

X2 = Number of Nights with a Band Present (monthly)

p-values for Advertising Expenditures = 0.00005 so advertising expenditures are staastistically significant

p - value for Number of Nights with Live Entertainment = 0.35 , can be removed and not stastically significant

Current spends on advertising = $ 500 per month

Current Number of Nights with Live Entertainment = 15 nights per month

Predict

1, Current Revenues = 618.4 + 282.68 * 500 + 95.43 * 15 = $143389

if raised by 15 %, new revenues = 282.68 * 500 * 0.15 + 143389 = $ 164590

if raised by 25 %, new revenues = 282.68 * 500 * 0.25 + 143389 = $ 178724

if raised by 50 %, new revenues = 282.68 * 500 * 0.50 + 143389 = $ 214049

2. If live entertainment nights are 12 nights per month

then new revenue =143389 - (15-12)*  95.43 = 143389 - 3*  95.43 = $ 143102

If live entertainment nights are 20 nights per month

then new revenue = 143389 + (20-15) *  95.43 = 143389 + 5*  95.43= $ 143866

If live entertainment nights are 24 nights per month

then new revenue = 143389 + (24 -15) *  95.43 = $ 144247

Identfy

Goals of 15% increase in gross revenues for next fiscal month

Gross Revenues (15% increase) = $164896

Goals of 25% increase in gross revenues for current quarter

Gross Revenues (25% increase) = $179235

Goals of 50% increase in gross revenues for current month

Gross Revenues (50% increase) = $215082

Predict

Here p-value play itsrole. We can see that we can remove live entertainments nights per month from this multiple regression analysis because it has very high p-value and that's why it is stastically insignificant .

so now, Gross revenues have linearrelationship with advertising expendiitures which have very significant p-value.

SO to have 15% incrrease in gross revnues in next fiscal month, advertising expenditures must be increased by 15 %.

Similarly, for the other goals of 25 % increasein monthly gross revenue for current quarter and 50 % increase in monthly gross revenues, it must increase 25% advertisement sales per quartera nd 50% advertisesales per month respectively.

so only advertising expenditure will be increased with respective values to meet the goals.

Potential strategies

(1) There must be more advertise expenditure.

(2) Advertisement in diversified sector should be done.

(3) Innovation is paramount.

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