I need the correct excel equation for this question:
A toy company buys large quantities of plastic pellets for usein the manufacturing of its products. The production manager wantsto develop a forecasting system for plastic pellet prices and isconsidering four different approaches and 6 different models. Heplans to use historical data to test the different models foraccuracy. The price per pound of plastic pellets (actual) hasvaried as shown:
Month | Price/Pound |
1 | $0.39 |
2 | 0.41 |
3 | 0.45 |
4 | 0.44 |
5 | 0.40 |
6 | 0.41 |
7 | 0.38 |
8 | 0.36 |
9 | 0.35 |
10 | 0.38 |
11 | 0.39 |
12 | 0.43 |
13 | 0.37 |
14 | 0.38 |
15 | 0.36 |
16 | 0.39 |
SIMPLE LINEAR REGRESSION
- Use all of the data, months 1-16, to calculate the regressionequation for this data. Use the months (1-16) as the independentvariable (x) and price as the dependent variable (y). Once you havethe equation, forecast months 7-16 (enter 7, 8, etc. as the x valuein the equation). Calculate the MAD for this forecasting model.Comment on the goodness of fit (R2) and significance ofthe model (F significance) to determine if this forecast modelshould be included in the consideration of the differentapproaches. (If the model is not significant, it cannot beconsidered, however, you must still make the forecasts andcalculate the MAD).
