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##### (Solution) - a Prepare line graphs of each of the six expenditure

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a. Prepare line graphs of each of the six expenditure categories. Indicate whether each category appears to be stationary or nonstationary.

b. Use Holt?s method to create models for each expenditure category. Use Solver to estimate the values of ? and ? that minimize the MSE. What are the optimal values of ? and ? and the MSE for each model? What is the forecast for next year for each expenditure category?

c. Estimate linear regression models for each expenditure category. What is the estimated regression equation and MSE for each model? What is the forecast for next year for each expenditure category?

d. Fysco?s Vice President of Marketing has a new idea for forecasting market demand. For each expenditure category, she wants you to estimate the growth rate represented by g in the following equation: ?t+1 = Yt(1 + g). That is, the estimated value for time period t + 1 is equal to the actual value in the previous time period (t) multiplied by one plus the growth rate g. Use Solver to identify the optimal (minimum MSE) growth rate for each expenditure category. What is the growth rate for each category? What is the forecast for next year for each expenditure category?

e. Which of the three forecasting techniques considered here would you recommend that Fysco use for each expenditure category?

Fysco Foods, Inc. is one of the largest suppliers of institutional and commercial food products in the United States. Fortunately for Fysco, the demand for ?food away from home? has been growing steadily over the past 22 years as shown in the following table (and the file FyscoFoods.xls on your data disk). This table breaks the total expenditures on food away from home (shown in the final column) into six component parts (e.g., eating & drinking places, hotels & motels, etc).

As part of its strategic planning process, each year Fsyco generates forecasts of the total market demand in each of the six food away from home expenditure categories. This helps the company allocate its marketing resources among the various customers represented in eachcategory.

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This question was answered on: * Jul 11, 2017 *

* * Solution~000392185451.zip (18.37 KB)

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