Introduction This assignment assesses your understanding of the simple linear regression model and provides you
Introduction
This assignment assesses your understanding of the simple linear regression model and provides you with an opportunity to apply this method to forecast data.
Instructions
Submit your answers to all questions in a Word document. Download the data sets and use Excel to solve the problems.
Question 1. Carolina Wood Products, Inc., a major manufacturer of household furniture, is interested in predicting expenditures on furniture (FURN) for the entire United States. You are going to help the company with this prediction. Download the data Download Download the databy quarter for 2007 through 2016.
Estimate the bivariate linear trend model for the data where TIME=1 for 2007, Q1 through TIME=40 for 2016, Q4.FURN = a + b(TIME)
Evaluate this model in one paragraph, with particular emphasis on its usefulness in forecasting.
Prepare a time-trend forecast of furniture and household equipment expenditures for 2017 based on the model in (b).
Period Time Trend Forecast
2017 Q1 41
2017 Q2 42
2017 Q3 43
2017 Q4 44
Question 2. Alexander Enterprises manufactures plastic parts for the automotive industry. Download data Download Download dataon its sales (in thousands of dollars) for 2012, Q1 through 2016, Q4. You are to forecast sales for 2017, Q1 through 2017, Q4.
Begin by preparing a time series plot of the data set. Does it appear from this plot that a linear trend model will be appropriate? Explain. (Attach your graph to your answer.)
Use a bivariate linear regression trend model to estimate this trend equation:
SALES = a + b(TIME)
Is the sign of b what you would expect? Is b significantly different from zero? What is the coefficient of determination for this model? Explain your answers.
Based on this model, make a trend forecast of sales (SALESFT) for the four quarters of 2017.
The actual sales (SALESA) for the four quarters are provided in the table.
2017, Q1 4447.1
2017, Q2 4501.6
2017, Q3 4543.2
2017, Q4 4603.1
Calculate RMSE for this forecast model in the historical period (2012, Q1–2016, Q4) as well as for the forecast horizon (2017, Q1–2017, Q4). Which of these measures accuracy and which measures fit?
Submission
Submit your answers in a Word document.
Submit the Excel files to show your calculations.
Include the relevant graphs of actual and forecast values of the series. Please do not forget to title your graph.
Submit your calculations and answers in a 1–3-page document and spreadsheet to the Dropbox by Day 7 of this week.
Evaluation Criteria
All forecasting assignments together make up 24% of the total course score. This assignment is worth 40 points. Here is the rubric Download rubricfor the assignment.
View Rubric
Forecasting Assignment Rubric
Forecasting Assignment Rubric
Criteria Ratings Pts
Evidence the problem was understood
6 pts
Exemplary Performance
Shows very good understanding of the problem and its solution technique
4 pts
At or Above Average
Shows sound understanding of the problem
2 pts
At or Below Average
Shows limited understanding of the problem
0 pts
Low Performance
Shows very limited or no understanding of the problem
/ 6 pts
Technique
10 pts
Exemplary Performance
Very effective use of technique; uses forecasting techniques efficiently while justifying the solution
7.5 pts
At or Above Average
Effective use of technique; uses appropriate technique, but some parts of the technique or summary statistics left unexplained
5 pts
At or Below Average
Limited use of appropriate techniques; is not precise in using forecasting technique
2.5 pts
Low Performance
Very limited use of technique; uses unsuitable techniques or simple manipulation of the data in attempting to find a solution
/ 10 pts
Answer
10 pts
Exemplary Performance
All correct answers, all requested explanations perfectly presented
7.5 pts
At or Above Average
Most answers correct, but incomplete explanations or incorrect reasoning
5 pts
At or Below Average
Most answers incorrect, appropriate techniques
2.5 pts
Low Performance
Incorrect answers, inappropriate techniques
/ 10 pts
Completion
8 pts
Exemplary Performance
All parts of the assignment completed
6 pts
At or Above Average
Most parts of the assignment completed
4 pts
At or Below Average
Some parts of the assignment completed
2 pts
Low Performance
Few to no parts of assignment completed
/ 8 pts
Organization and Neatness
6 pts
Exemplary Performance
Clear organization with few or no grammar or spelling errors
4 pts
At or Above Average
Clear organization with some grammar or spelling errors
2 pts
At or Below Average
Clear organization with significant grammar and spelling errors
0 pts
Low Performance
Unclear organization with significant grammar and spelling errors
/ 6 pts
Total Points: 0
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