AmcrPlas, Inc., produces 20-ounce plastic drinking cups that are embossed with the names of prominent beers and soft drinks. It has been observed that sales of the cups match closely the seasonal pattern associated with beer production, but that, unlike beer production, there has been a positive trend over time. The sales data, by month, for 2004 through 2007 are as follows:

a. Use these data to estimate a linear time trend as follows:

SALES = a + b (T)

SALES = _______ +/- _______ (7")

(Circle + or €“ as appropriate)

Do your regression results support the notion that there has been a positive time trend in the SALES data? Explain.

b. Use your equation to forecast SALES for the 12 months of 2008:

c. Actual SALES for 2008 are:

On the basis of your results in part (b) in comparison with these actual sales, how well do you think your model works? What is the RMSE for 2008?

d. Prepare a time-series plot of the actual sales and the forecast of sales for 2004M01 through 2008M12. Do the same for just the last two years (2007M01 to 2008M12). Do your plots show any evidence of seasonality in the data? If so, how might you account for it in preparing a forecast?

Transcribed Image Text:

Period T. Sales Period Sales т 1,604 1,643 1,795 2004M01 2004M02 2006M01 25 857 921 2006M02 26 2004M03 2004M04 2004M05 1,071 2006M03 27 28 1,133 1,209 1,868 1,920 1,953 2006M04 2006M05 29 2004M06 1,234 1,262 1,258 1,175 1,174 2006M06 2006M07 30 31 2004M07 7. 1,980 1,989 1,897 1,910 1,854 2004M08 8. 2006M08 32 2004M09 2006M09 2006M10 33 34 2004M10 10 2004M11 11 1,123 2006M11 35 2004M12 12 1,159 1,250 1,289 1,448 1,497 1,560 1,586 1,597 1,615 2006M12 36 1,957 1,955 2,008 2005M01 2005M02 13 14 2007M01 2007M02 37 38 2,171 2,202 2,288 2,314 2,343 2,339 2,239 2,267 2,206 2005M03 15 2007M03 39 40 2005M04 16 2007M04 2007M05 2005M05 17 41 18 2005M06 2007M06 2007M07 42 2005M07 19 43 2005M08 20 2007M08 44 2005M09 21 1,535 1,543 1,493 1,510 2007M09 45 2005M10 2005M11 2005M12 22 23 2007M10 46 2007M11 47 24 2007M12 48 2,226 123