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Prior to beginning work on this assignment, review Chapter 12: Time Series Analysis and Forecasting.
You may find it helpful to review How to Perform Multiple Regression on Quarterly Seasonal Data in Excel (Links to an external site.).
For this assignment, you are required to complete Problem 64 in Chapter 12 of your textbook. Once complete, submit your Excel document in Waypoint. Show all work.
(S/B: 12/64) Let Yt be the sales during month t (in thousands of dollars) for a photography studio, and let Pt be the price charged for portraits during month t. The data are in the file Week 4 Assignment Chapter 12 Problem 64 Download Week 4 Assignment Chapter 12 Problem 64. Use regression to fit the following model to these data:
Yt = a + b1Yt−1 + b2Pt + et
This equation indicates that last month’s sales and the current month’s price are explanatory variables. The last term, et, is an error term.
For your assignment, complete the following:
If the price of a portrait during Month 21 is $10, what would you predict for sales in Month 21?
In your Excel spreadsheet,
Utilize the regression model.
Utilize the support tool of Excel.
Predict sales as described.