Economic Forecasting

Project Proposal

Due by Midnight 9/16/2013

You have been hired by a major corporation to forecast their quarterly sales for two years. As a result, you need to show progress in the initial forecasting steps. Your proposal should begin with a hypothesis statement about the variables that you selected to use in the forecast of company sales.

1. Your proposal should begin with a hypothesis statement about the variables that you selected to use in the forecast of company sales. Include a brief statement of why you chose each variable to forecast sales.

2. Obtain quarterly sales/revenue data for the company you are assigned and load it into Minitab and save it as your Eco 309 Project. See the email that I sent you earlier with the quarterly data. You can refer to the project outline for further details. You may also download and save the data as an EXCEL file. The first column should be the dates and second column should be your data. Always label your columns appropriately.

3. Go to one of the approved data sources. This time you will need to obtain minimum 3 related variables. These variables should be values determined outside of the firm. (Not company accounting data) We will call these related variables the X variables. These variables will be quarterly consistent with your Y variable (If your Y variable is quarterly, your X variables will also be quarterly). All variables should be from the same time period. You can refer to the project outline for further details.

4. As an option for one of the three X variables you may Ggo to the company web site, annual reports or 10-K SEC filings and obtain any relevant internal data that you wish to include as another X variable. This could be R&D Expenses, Marketing Expenses, Total Expenses Product Units, Employees, etc. that you believe are important to the output of the company. Make sure that this variable is quarterly as well and covers the same time as the Y variable.

5. As another option for one of the three X variables you may go to the company data in Doc Sharing and see if you can find either competitor companies or companies that produce goods that are complimentary to your assigned company. You may also look for competitors sales data from 10-Ks and annual reports. Remember that this must also cover the entire time period you have for the assigned Y data. You may use the revenue/sales figures for these companies as another X variable.

6. Download and save all your X variables in your Minitab project worksheet labeled appropriately and save Minitab project. You may also save them as an EXCEL file. Recall that the first column is dates and second column is your Y variable. Your third column will be X1, 4th will be X2 and so forth. Label your X variables properly so I can understand what those variables are.

7. At this point you should have a copy of dates (C1), Y variable (C2) and X variables (C3 – C5) in a MINITAB project worksheet. Make sure that the variable columns are labeled correctly so I can understand which variables you are analyzing.

8. Run individual “Time Series Plots” and “ACF” on all your variables. Note the Trend, Cycle and Seasonality characteristics that are indicated by these plots. Note which X variable trend, cycle and seasonality characteristics are similar to the Y variable characteristics.

9. Produce descriptive statistics for all your variables. Comment on the mean, range and standard deviation and what they indicate relative to each variable.

10. Run Scatter plots of Y against each X separately. Note the linearity of the relationship. Classify it as positive or negative, weak, moderate or strong.

11. Develop and show the correlation matrix (you can find it under Stat>Basic Statistics>Correlation) of Y and all Xs. Enter the Y values first followed by each X that you have in order of the data columns. You need to tell me which Xs are more related to Y and which Xs are not. You need to prove that the relationships are statistically significant.

12. Your proposal should be a word document and include the pasted relevant Minitab output as well as the, the data used in a table at the end of the word document. The table should be followed by a brief description and source of each variable. You should put the webpage or document page that each variable came from.

Do not submit Minitab files. Submit the word proposal document in the proposal dropbox.