Chapter 1 Exercises

1.8 Exercises

1. For cases 3 and 4 in section 1.5, list the possible predictor variables that might be useful assuming relevant data is available
   • 3: car mileage, make/model, condition, average distance of trips, car color, accidents
   • 4: number of airlines, airplane model type, or even # of seats available if a supply side issue. Quarterly or seasonal data, holiday / sporting event calendar by hub for demand.
2. For case 3, describe the five steps of forecasting in context
   1. Problem definition: Car resale value was not being optimized, so they were not in control of profits.
   2. Gathering information: The company in question provided the needed data
   3. Prelim analysis: ….you would analyze the data
   4. Choosing and fitting models: … and choose the best model which sounds more like a linear regression and less like a time series for this problem
   5. Using and evaluating a model: if a time series problem, use the data you have to back test