Quantitative Methods for Business Problem(LINGO)

Assignment 1/Assignment.docx

Part I: Regression Forecast Modeling Analysis of Their Insurance Companies50%

Part II: Anderson Text Problems 50%

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Part 1: Regression Forecast Modeling Analysis of Their Insurance Companies

Regression Model Fit for Three Sets of Explanatory Variables

Using the first 60 months of data for years 2008, 2009, 2010, 2011, and 2012, forecast the stock price of your insurance company for months 61, 62, and 63 in year 2013. In all cases, the response variable is the stock price of your insurance company.

Regression Models - Explanatory Variable

A. Set 1: Variables of explanation: time, relating it to the stock price of your insurance company.

1.time (t) (1, 2, ..., 60) time (1/t) (t-1, 2, ..., 60)

2.time (t2) (1, 2, ..., 48) time (1/t) (t-1, 2, ..., 60)

3.time [(1/t)] (1, 2, ..., 48) time (1/t) (t-1, 2, ..., 60)

4.time (ln t) (1, 2, ..., 48) time (1/t) (t-1, 2, ..., 60)

5.time (√t) (1, 2, ..., 48) time (1/t) (t-1, 2, ..., 60)

For Set1, there will be five one-variable regression models. These models will be generated by using Minitab 16 regression.

For each regression model set, you need to display the R2, the model coefficients, the model standard error. You need for each model Set (1) to identify which model gives the best fit and why.

For each set of models, you will need to display the forecast of the stock price of your insurance company for months 61, 62, and 63 You need for each model Set (1) to identify which model gives the best forecast and why.

B. Set 2: Variables of explanation: economics, relating it to the stock price of your insurance company.

1.gdp (1, 2, ..., 60)

2.oil price per barrel (1, 2,.., 60)

3.unemployment rate (1, 2,..., 60)

4.consumer price index (1, 2,…, 60)

For Set 2, there will be four one-variable regression models and one four-variable regression models. These models will be computed by using Minitab 16 regression.

For each regression model set, you need to display the R2, the model coefficients, the model standard error. You need for each model Set (2) to identify which model gives the best fit and why.

For each set of models, you will need to display the forecast of the stock price of your insurance company for months 61, 62, and 63. You need for each model Set (2) to identify which model gives the best forecast and why.

C. Set 3: Variables of Explanation: (financial averages relating it to the stock price of your insurance company)

1.Dow Jones Average (1, 2 ,…,60)

2.Standard and Poor’s Average (1, 2, …, 60)

3.NASDAQ Average (1, 2,…, 60)

For Set 3, there will be three one-variable regression models and one three-variable regression models. These models will be computed by using Minitab 16 regression.

For each regression model set, you need to display the R2, the model coefficients, the model standard error. You need for each model Set (3) to identify which model gives the best fit and why.

Part II: Anderson Text Problems

Text book

7.23 8.27(a) 9.14

Note: A complete and thorough answer requires a full discussion of the model decision variables, objective function, and constraints. It also requires a thorough discussion of the Lingo optimization output.