Question

The Koffi Coffee House Sales Management

The owner of Koffi, the sole coffee house located in a resort area, wants to develop a forecast based on the relationship between tourism and coffee drinks sold. He has generated the following data over the past 12 months:

Month	Tourists (thousands)	Coffee Drinks (per day)
January	22	132
February	25	175
March	34	210
April	30	150
May	15	60
June	10	50
July	8	45
August	6	40
September	10	35
October	15	75
November	18	110
December	20	140

The data from using Data Analysis on Excel is as follows:

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.954141355
R Square	0.910385725
Adjusted R Square	0.901424297
Standard Error	18.57063782
Observations	12
ANOVA
	df	SS	MS	F
Regression	1	35034.98077	35034.98	101.5894
Residual	10	3448.685892	344.8686
Total	11	38483.66667
	Coefficients	Standard Error	t Stat	P-value
Intercept	-11.5743276	12.46354188	-0.92865	0.37494
Tourists (thousands)	6.389163997	0.633898777	10.07915	1.48E-06

Questions for Case Example 2

Question 2-1. What is the approximate intercept, a?

Answer 2-1.

B=

Question 2-2. What is the approximate slope, b?

Answer 2-2.

Question 2-3. What is the forecasted number of coffee drinks sold if the number of tourists is 25 (thousand)?

Answer 2-3.

Question 2-4. What is the correlation?

Answer 2-4.

Question 2-5. What is the coefficient of determination?

Answer 2-5.

Answer 1

Equation :

Y=a+bX

Y=Dependent Variable=Coffee Drinks per day

a=Intercept

b=Slope

X=Independent Variable =Tourists (thousands)

2.1What is the approximate intercept?

a=Intercept=-11.6

2.2What is the approximate slope, b?

b=Slope=6.4

2.3What is the forecasted number of coffee drinks sold if the number of tourists is 25 (thousand)?

Y=a+bX

X=25

Y=-11.6+6.4*25=148.4 (Rounded to whole number=148)

Forcasted Number of Coffee Drinks Sold=148

Question 2-4. What is the correlation?

R Squared=0.910385725

R=Correlation Coefficient =SQUARE ROOT(0.910385725)=

0.954141

2.5 What is the coefficient of determination?

Coefficient of Determination =R squared=0.910385725