We are to predict sales for a motel chain based on the information in Table (file Motel.xls).
Quarter
Potential
Customers (thousands)
Advertising
(thousands of dollars)
Season
Sales (millions)
1
100
30
Winter
1,200
2
105
20
Spring
880
3
111
15
Summer
1,800
4
117
40
Fall
1,050
5
122
10
1,700
6
128
50
350
7
135
2,500
8
142
760
9
149
2,300
156
1,000
11
164
60
1,570
12
172
2,430
13
181
35
1,320
14
190
1,400
200
70
1,890
16
210
25
3,200
17
221
2,200
18
232
1,440
19
243
80
4,000
264
4,100
a Use this data and multiple regression to make predictions for the motel chain’s sales during the next four quarters. Assume that advertising during each of the next four quarters is $50,000.
b Use the Holt method to make forecasts for the motel chain’s sales during the next four quarters.
c Use simple exponential smoothing to make predictions for the motel chain’s sales during the next four quarters.
d Use Winter’s method to determine predictions for the motel chain’s sales during the next four quarters.
e Which forecasts would be expected to be the most reliable? (Hint: Use advertising, lagged by one period, as an independent variable.)
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