Question 2 Create a multiple regression forecasting model that includes a trend

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Question 2

Create a multiple regression forecasting model that includes a trend component and daily seasonality dummy variables. Use Saturday as your base day. What is the forecast for Sunday of Week 5? (Report 4 digits to the right of the decimal.)

Day Week Sales Volume (US$ 000s) Sun 1 9 Mon 1 17 Tue 1 15 Wed 1 19 Thu 1 14 Fri 1 16 Sat 1 8 Sun 2 13 Mon 2 19 Tue 2 15 Wed 2 22 Thu 2 15 Fri 2 20 Sat 2 13 Sun 3 14 Mon 3 20 Tue 3 18 Wed 3 23 Thu 3 19 Fri 3 23 Sat 3 14 Sun 4 18 Mon 4 21 Tue 4 23 Wed 4 24 Thu 4 19 Fri 4 23 Sat 4 15

Explanation / Answer

Code days in excel as shown below:

Click on Data->Data analysis. Select regression. In Y, select sales data range and in x, select say and week. Click ok. the excel output is shown below:

From above, regression equation is:

Sale=12.35714-0.05357(Days)+2.128571(Week)

For the forecast for Sunday of Week 5, plug Week = 5 and Days = 1

Sale=12.35714-0.05357(1)+2.128571(5) = 22.9464

Day Week Sales Volume (US$ 000s) 1 1 9 2 1 17 3 1 15 4 1 19 5 1 14 6 1 16 7 1 8 1 2 13 2 2 19 3 2 15 4 2 22 5 2 15 6 2 20 7 2 13 1 3 14 2 3 20 3 3 18 4 3 23 5 3 19 6 3 23 7 3 14 1 4 18 2 4 21 3 4 23 4 4 24 5 4 19 6 4 23 7 4 15

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