Issac Palanca, the General Manager of Orbit Group, Thinks That

question 69

Short Answer

Issac Palanca, the general manager of Orbit group, thinks that his firm's engineering services contracted to highway construction firms are directly related to the volume of highway construction business contracted with companies in his geographic area. He wonders if this is really so, and if it is, can this information help him plan his operation better by forecasting the quantity of his engineering services required by construction firms in each quarter of the year? The table below presents the sales of his services and the total amounts of contracts for highway construction over the last eight quarters:
$$\begin{array} { | c | c | c | } \hline \text { Quarter } & \text { Sales } & \begin{array} { c } \text { Contracts } \\\text { Released }\end{array} \\\hline 1 & 8 & 153 \\\hline 2 & 10 & 172 \\\hline 3 & 15 & 197 \\\hline 4 & 9 & 178 \\\hline 5 & 12 & 185 \\\hline 6 & 13 & 199 \\\hline 7 & 12 & 205 \\\hline 8 & 16 & 226 \\\hline\end{array}$$
A) Using this data, develop a regression equation for predicting the level of demand of Orbit group's services.
B) Determine the coefficient of correlation and the standard error of the estimate.

• A) Using this data, develop a regression equation for predicting the level of demand of Orbit group's services.
• B) Determine the coefficient of correlation and the standard error of the estimate.

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Definitions:

Interim Reporting

The financial statements issued by a company for a period less than its full fiscal year, often quarterly, to provide timely information to investors.

Tax Liability

The total amount of tax owed by an individual or corporation to a taxing authority.

Dollar-Value LIFO

An inventory valuation method that uses the last-in, first-out (LIFO) principle, but adjusts for changes in the value of money over time.

Current Cost

The expense required to replace an asset or an inventory item at the present time, as opposed to its historical purchase price.