Advertising and Sales

4.1 The data below are the quarterly demand levels for electricity (in 1000 megawatts) in Cape Town from 1988 to 1991.

You are required to:

4.1.1 Obtain a 4-terms moving average trend.     (4)

4.1.2 Find the seasonal variations using the multiplicative model.     (8)

4.2 In an attempt to analyze the relationship between advertising and sales, the owner of a furniture store recorded the monthly advertising budget (in thousand rand) and the sales ( in millions rand) for a sample of 12 months. The data is listed below.

Identify the Dependent and the independent variables.     (1)

4.2.2 Draw a scatter diagram. Does it appear that adverting and sales are linearly related?     (3)

4.2.3 Calculate Pearson’s correlation coefficient and interpret it.     (5)

4.2.4 Calculate the (least square) regression line and interpret the coefficient (Intercept and the slope).     (7)

4.1.5 Estimate the sales if the company spends R150000 on advertising.      (2)