Case 1: Camp Forever Young, Inc.

During the planning session for the next camping season, the owner, Harper Lewis asked you, the Chief Financial Officer for Camp Forever Young, Inc., to predict her fuel costs each coming week.

while her staff pickup customers at the airport and drives them to the various camp sites. Since she is not actively driving the van, it has been her process to maintain a separate bank account specifically for fuel costs and giving the debit card tied to the account to her staff. That way, staff members can easily fill the tank on the way back from dropping off customers. Harper wants to keep a low balance in this account, just sufficient to pay fuel costs for the upcoming week. To that end, she currently checks the balance in the account each Monday morning, and transfers in just enough funds to bring the balance to $1,000. . Therefore, Harper wants to improve from her current process of refilling that account to $1,000 at the beginning of each week while minimizing both these risks.

on each Monday morning, she recorded the price of gas and the number of reservations for the coming week (see the attached Excel spreadsheet). She would like to use one of these measures to estimate the weeks fuel costs, but she is not sure which one would give her the best estimate. The number of reservations tells her how many customers have reserved campsites for the coming week, but some reservations are later cancelled (or no-shows) and many customers show up unannounced for a trip. In addition, the price of gas on Monday morning usually does not stay the same through the entire week. Harper knows that neither of these variables will perfectly predict her fuel costs, but figures that anything would be better than her current process.

Required

1. Of the three cost estimation methods covered in this class (high-low method, scatter diagrams, or least squares regression), which would give the most accurate cost estimates? Explain why that method is more accurate, and how it work

Camp Forever Young, Inc.
Fuel Cost Data
Week	# of Reservations	Gas price	Fuel cost
1	3	$2.69	$153.00
2	21	$2.45	$468.00
3	23	$2.57	$634.50
4	12	$2.36	$113.43
5	15	$2.38	$398.50
6	11	$2.65	$175.00
7	24	$2.56	$531.50
8	11	$2.66	$233.84
9	10	$2.33	$209.27
10	2	$2.30	$115.00
11	31	$2.35	$801.84
12	12	$2.75	$396.35
13	41	$2.68	$895.00
14	18	$2.29	$544.88
15	5	$2.30	$674.00
16	12	$2.31	$443.22
17	42	$2.34	$970.08
18	6	$2.14	$498.00
19	35	$2.86	$688.77
20	18	$2.67	$962.92
21	31	$2.58	$650.00
22	11	$2.75	$664.67
23	18	$2.23	$496.00
24	11	$2.27	$599.06
25	9	$2.42	$565.23