Business outcomes using predictive analysis techniques.
Determine business outcomes using predictive analysis techniques.
Scenario
You are the manager for a company that sells outdoor grills. You’ve recently earned your MBA, and you want to apply what you’ve learned to your position to help with decision-making. You have developed the following estimated regression equation to help make data-driven decisions for the store. This will help you to better see how the unemployment rate, temperature, gas prices, and the price of steak impact weekly outdoor grill sales.
Y = 22,100 - 412x1 + 818x2 - 93x3 - 71x4
Where:
· Y = weekly sales
· x1 = local unemployment rate
· x2 = weekly average high temperature
· x3 = number of activities in the local community
· x4 = average price of gasoline per gallon
Instructions
Use the above equation and information to answer the following questions in a Word document, and create a guideline to use for future business decisions:
Based on the equation above, please provide the value for x1, x2, x3, and x4. Also, explain what these values mean in the context of this question. For example: What does the value of 818 mean in the equation above (specify if it is x1 or x2 or x3 or x4, and explain what those values mean based on the equation and context)?
What are the estimated weekly sales if the unemployment rate is 3.7%, the average high temperature is 670, there are 10 activities, and the average price of gasoline is $3.39 per gallon?
Evaluate data mining techniques that could be used to enhance manager's decision-making to increase sales.
What recommendations or decisions could you make based on the predictive analysis in question 2?
Sample Solution
Based on the equation above, please provide the value for x1, x2, x3, and x4. Also, explain what these values mean in the context of this question.- x1: Local unemployment rate. A 1% increase in the unemployment rate is associated with a decrease in weekly sales of 412 units.
- x2: Weekly average high temperature. A 1 degree increase in the average high temperature is associated with an increase in weekly sales of 818 units.
- x3: Number of activities in the local community. A 1-unit increase in the number of activities is associated with an increase in weekly sales of 93 units.
Full Answer Section
- x4: Average price of gasoline per gallon. A 1-cent increase in the average price of gasoline is associated with a decrease in weekly sales of 71 units.
- What are the estimated weekly sales if the unemployment rate is 3.7%, the average high temperature is 670, there are 10 activities, and the average price of gasoline is $3.39 per gallon?
- Evaluate data mining techniques that could be used to enhance manager's decision-making to increase sales.
- Customer segmentation: This involves grouping customers together based on their shared characteristics, such as age, income, and interests. This can help the manager to target marketing campaigns more effectively.
- Predictive analytics: This involves using historical data to predict future trends. This can help the manager to identify opportunities to increase sales, such as new products or services that are likely to be popular.
- Text mining: This involves analyzing text data, such as customer reviews, to identify trends and patterns. This can help the manager to understand what customers are looking for and how they feel about the company's products and services.
- What recommendations or decisions could you make based on the results of your analysis?
- Increase marketing efforts in areas with high unemployment rates. This is because the estimated weekly sales are lower in areas with high unemployment rates.
- Promote the company's products and services during hot weather. This is because the estimated weekly sales are higher during hot weather.
- Offer discounts on products and services during periods of high gasoline prices. This is because the estimated weekly sales are lower during periods of high gasoline prices.