Shalvin Kumar Saha

13EE10045

5. Seasonal Variation
Seasonal variation is the variation that is seen only in a particular season or a
particular period of time. For example, consider sales of Sculpture of Lord
Ganesha, we can clearly see that sales of such item will soar when dates are
close to Ganesha Chaturthi.
Similarly, sales of woollen apparels will go high in the winter season and sales of
cotton outfits will soar in summer.
Dummy Variable Technique
So in the Dummy Variable Technique we declare few variable and assign them
some values in order to conduct regression on such data to forecast future
values.
Equation : Y = a1 + b1 * d1 + b2 * d2 + b3 * d3
d1, d2, d3,. are dummy variables and have values either 0 or 1 which
depends on if you are using b1, b2, b3,.. respectively.
So this is the model equation that we will use and predict future values.
However this a regression technique and values of co-efficient change
accordingly after every analysis.

6. Given Aztec depends on Marketing for its sales.

Allowed expenditure = $2 Million
Expenditure = $2 Million
Since its said that the sales of product are heavily dependent on the amount
spent for the marketing the elasticity of demand for marketing is a positive
number and probably a large number.
Equation of demand for Advertising:
D = f(P)
P: Profit.
f(x) is a function such that it increases over the positive x axis.
It could be D = aP+b; P-> Profit; a and b are some constants such that a is
greater than 0.

4.
Equation Q = 70 3.5P 0.6M + 4PZ

Q: Demand
P: Price

M: Income
Pz: Price of related good Z
Now since with increase in M (income) the demand decreases it is an inferior
product.
Price of z increases = Demand of Q increases => They are substitute for each
other.
P=10. M =30. Pz = 6.
Q = 70 3.5*10 0.6*30 + 4*6
= 70 35 18 + 24 = 35 + 6 = 41
Assume Demand = Q = D.
Price Elasticity: (D/D)/ (P/P) = (D/P)*(P/D) = -3.5*(10/41) = -0.853
Income Elasticity: (D/D)/ (M/M) = (D/M)*(M/D) = -0.6*(30/41) = -0.4390
Cross-Price Elasticity: (D/D)/ (Pz/Pz) = (D/Pz)*(Pz/D) = 4*(6/41) = 0.585

2. 12 in Parenthesis means the sales in the first year in the consideration.

12 means 12,000 lakh(as per the detail in the question.
Sales Figure:
Year
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007

Sales
12
13.08
14.25
72
15.54
035
16.93
898
18.46
349
20.12
52
21.93
647
23.91
075
26.06
272
28.40
836
30.96
512
33.75
198
36.78
966

t
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

40.10
072
43.70
979
47.64
367

1.
(a) Using SMA-3 the result is
Yellow indicates predicted value.

Mont
h
Sales
SMA-3
1
29
2
23
3
22
24.666
4
20
67
21.666
5
18
67
6
16
20
7
18
18
17.333 17.333
8
33
33
17.111 17.111
9
11
11
(b)
WMA Weighted Mean Average
Month WMA
1
2
3
4
25.8
5
22.1
6
20.6

(c) Exponential Smoothing for July(month = 7) with a = 0.1

Foreca
Month Sales
st
1
29
29

2
3
4
5

23
22
20
18

16

29
28.4
27.76
26.984
26.085
6
25.077
04

3.
R2
0.2247

Dependent variable: S
Observations: 36
Variable
Intercept
A
R

Parameter
Estimate
175086.0
0.8550
- 0.284

F-ratio
4.781
Standard
error
63821.0
0.3250
0.164

p-value on F
0.0150
t-ratio
2.74
2.63
- 1.73

p-value
0.0098
0.0128
0.0927

a = 175086.0
b = 0.8550
c = -0.284

p value for A (i.e. Vanguard expenditure) is 0.0128 which is less than

0.0150(common alpha level) and therefore it has an effect on the sales of the
Bright Side Detergent.

p value for R (i.e. competitors expenditure) is 0.0927 which is greater than

0.015(common alpha level) and thus doesnt fit with the hypothesis that it
affects the sales of Bright Side Detergent.

Expected sales: 175086.0

= $182,086 a week.

+ 0.8850*$40k+(-0.284)*$100k