DS 101 Exam 2 NAME ______

FALL 2006 SSN xxx -- xx --

DR TAYLOR DISK # ______

100 POINTS (70 minutes)

Directions: Place all of your answers in the space provided on the exam. If you need additional space , use the back side of the exam. MAKE SURE YOU SHOW ALL OF YOUR WORK (thought process). When you are done, make sure you turn in both your exam and your disk.

  1. (50 points) In the file ZI.SF3 (S:\TAYLORS\ZI.SF3) resides variables which represent monthly values for ZI’s Pizza, a restaurant located in South Natomas. The data covers the months from December 2002 through October 2006. The variables represented are

ZI.sales : gross sales

ZI. nnews : amount of advertising spent in the Natomas news

ZI.bee amount of advertising spent in the Sacramento Bee.

When questioned about significant events that affected their sales, Kas Ziegler, the manager, stated that a competitor opened up business in the same general location starting in May 2004, but only stayed open until April 2005.

a) Construct a regression model to explain the variation in sales for ZI’s Pizza (USE THE NEXT PAGE OF THE EXAM TO SHOW YOUR WORK)

Final Equation :

b) Predict the sales for November 2006, assuming that there will be $450 spent on advertsing in the Sacramento Bee and $ 350 spent advertising in the Natomas News. Explain your forecasting results for November, given the stated conditions.(point estimate and confidence interval).

c) What was the financial impact, with regards to gross sales, for ZI’s Pizza, when the competitor was open for business.

d) Which advertising source is more effective for ZI’s , the Natomas News or the Sacramento BEE? Explain why.

Construction work for problem #1

2. (15 POINTS) Suppose that you have been hired as an expert witness in a court case to determine the financial impact that an illegal ad had on a firm. State how you would ideally conduct such an analysis, remembering that you will be called upon to testify before a jury, if necessary

3.(12 points) Shown below are four different scenarios involving two variables Sales and Advertising (Advert). Assuming that Sales is declared to be the output variable and Advert as the input variable, explain the relationship between the variables.


Realtionship: /
Realtionship:

Realtionship: /
Realtionship:

4.In the file S:\TAYLOR\EUGENE.SF3 resides data for a company. A model from this data is

Multiple Regression Analysis

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Dependent variable: Sales

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Standard T

Parameter Estimate Error Statistic P-Value

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CONSTANT 594780.0 199232.0 2.98537 0.0044

LAG(Sales,12) 0.844408 0.0805184 10.4871 0.0000

Nurse 438622.0 162602.0 2.69751 0.0096

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Analysis of Variance

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Source Sum of Squares Df Mean Square F-Ratio P-Value

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Model 1.33896E13 2 6.6948E12 78.26 0.0000

Residual 4.19175E12 49 8.55459E10

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Total (Corr.) 1.75813E13 51

R-squared = 76.158 percent

a. (12 points) Using this model, provide forecasts for the next 12 months. In the table below, fill in the forecasts for all months that are not XXXXX’ed out. State any assumptions you make.

Month / Forecast
Nov-06
Dec-06 / XXXXX
Jan-07
Feb-07 / XXXXX
Mar-07
Apr-07 / XXXXX
May-07
Jun-07 / XXXXX
Jul-07 / XXXXX
Aug-07
Sep-07 / XXXXX
Oct-07

(5 points) Assumption(s):

(6 points) In the model above, the coefficient estimate for Nurse is 438622.0.. Interpret what this means in the context of the model.

END of Exam #2

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