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    EBF Group Assignment

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    EBF Group Assignment

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    6 views3 pages

    EBF Group Assignment

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    © All Rights Reserved
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    of 3

    Econometrics and Business Forecasting

    Group Assignment
    IPM2021-26
    Total Marks: 25 (10+5+10)
    Submission date: 7th November 2024
    Q1. A New England-based commuter airline has taken a survey of its 15 terminals and has
    obtained the following data for the month of February, where:
    SALES = total revenue based on number of tickets sold (in thousands of dollars)
    PROMOT = amount spent on promoting the airline in the area (in thousands of dollars)
    COMP = number of competing airlines at that terminal
    FREE = the percentage of passengers who flew free (for various reasons)

    SALES ($) PROMOT ($) COMP FREE


    79.3 2.5 10 3
    200.1 5.5 8 6
    163.2 6 12 9
    200.1 7.9 7 16
    146 5.2 8 15
    177.7 7.6 12 9
    30.9 2 12 8
    291.9 9 5 10
    160 4 8 4
    339.4 9.6 5 16
    159.6 5.5 11 7
    86.3 3 12 6
    237.5 6 6 10
    107.2 5 10 4
    155 3.5 10 4

    a) Determine the best-fitting regression equation to predict the total revenue of the airline
    based on number of tickets sold from the given data. What is the explanatory power of this
    equation?
    b) Do the passengers who fly free cause sales to decrease significantly? State and test
    appropriate hypotheses. Use α = 0.01.
    c) Does an increase in promotions by $ 1000 change sales by $ 28000, or is the change
    significantly different from $ 28000? State and test appropriate hypotheses. Use α = 0.10.
    Q2. The manager of a bank in Mumbai is responsible for ATM operations in three areas in
    the city, namely Andheri, Vile Parle and Santa Cruz. When he took over the operations, he
    was faced with the problem of cash running out from the ATM Machines. So he collected
    data from all the three areas to check whether ATMs in all three areas need equal amount of
    cash. He also wanted to know whether different ATMs at different locations needed the same
    amount of cash or not. So, he collected the following data about cash withdrawals during the
    last four months.

    Monthly Withdrawals from ATMs


    Location
    Station Market Bank
    40 37 35
    39 39 34
    Andheri
    41 37 38
    39 36 32
    38 36 34
    42 37 35
    AREA Santa Cruz
    40 34 33
    39 35 34
    38 39 35
    39 34 35
    Vile Parle
    39 37 34
    41 36 33

    Help the manager in taking decision whether he should place equal amount of cash in all
    ATMs:
    a) in all Areas
    b) in all Locations
    c) in all Locations as well as Areas
    Q.3 The data given below is used by an internet cable manufacturer to predict sales to a
    major customer for the period 2008-2023.
    The variables in the table are defined as follows:

    • Y = annual sales in MPF (million paired feet)


    • X2= gross national product (GNP), $, billions
    • X3= housing starts, thousands of units
    • X4= unemployment rate, %
    • X5= prime rate lagged 6 months
    • X6= Customer line gains, %
    Prime
    Annual
    Housing Unemployment Rate Customer
    Year GNP Sales
    Starts Rate lagged by line gain
    (MPF)
    6 months
    2008 1051.8 1503.6 3.6 5.8 5.9 5873
    2009 1078.8 1486.7 3.5 6.7 4.5 7852
    2010 1075.3 1434.8 5 8.4 4.2 8189
    2011 1107.5 2035.6 6 6.2 4.2 7497
    2012 1171.1 2360.8 5.6 5.4 4.9 8534
    2013 1235 2043.9 4.9 5.9 5 8688
    2014 1217.8 1331.9 5.6 9.4 4.1 7270
    2015 1202.3 1160 8.5 9.4 3.4 5020
    2016 1271 1535 7.7 7.2 4.2 6035
    2017 1332.7 1961.8 7 6.6 4.5 7425
    2018 1399.2 2009.3 6 7.6 3.9 9400
    2019 1431.6 1721.9 6 10.6 4.4 9350
    2020 1480.7 1298 7.2 14.9 3.9 6540
    2021 1510.3 1100 7.6 16.6 3.1 7675
    2022 1492.2 1039 9.2 17.5 0.6 7419
    2023 1535.4 1200 8.8 16 1.5 7923
    You are to consider the following model:
    Yi = β0+ βiXit + ut
    a) Estimate the preceding regression equations.
    b) What are the expected signs of the coefficients of regression models?
    c) Are the empirical results in accordance with prior expectations?
    d) Are the estimated regression coefficients individually statistically significant at the 5
    percent level of significance?
    e) Draw the forecasting interval of each variable for year 2026 at the 10 percent level of
    significance.

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