Regression, Read the article “Apple turns over entire inventory every five days.”1 It is, Basic Statistics

Regression, Basic Statistics

Assignment Help:

Read the article “Apple turns over entire inventory every five days.”1
It is not surprising that, the
success of managing inventory can lead to the success of a firm’s operational performance.
Although we have not talked about the inventory management models, we will first look at real
inventory data to identify some of the important factors that affect a firm’s inventory
performance.
The Excel file of Assignment 5 contains the quarterly information (Q1 to Q4) for more than 250
firms (mostly in the retailer and wholesaler industries, where inventory management is crucial to
firms’ performance) in the fiscal year of 20102
. Most of the variables are fairly straightforward,
except the following ones whose definitions are shown below:
Account Payable = can be approximated to be the trade credit owed to the
firm’s suppliers.
Inventory turnover = how fast a firm turns their inventory into sales
= (cost of goods sold)/(this period and last period’s
inventory average)
Gross Margin = (sales – cost of goods sold)/sales
Capital Intensity = (Gross fixed assets)/( Gross fixed assets + inventory)
Trade Credit Ratio = Account Payable/sales
You may use Excel and turn in the printout as well as the Excel file (by email). You still need to
answer all questions asked in the problem by writing on your printout. For the significance level,
you can test for ?=1%, 5%, and 10%, respectively.
Two inventory performance measures can be used here: the inventory level (Column H) or the
inventory turnover (Column L). First, we investigate the variables that are correlated with the
inventory level.
Hypothesis 1: The inventory level is positively correlated with the assets.
Hypothesis 2: The inventory level is positively correlated with the market value.
Hypothesis 3: The inventory level exhibits a seasonality pattern.
Hypothesis 4: The inventory level is generally higher in Q3 than Q1, Q2, and Q4, after
controlling for the firm size measured by assets.
Hypothesis 5: The inventory level is positively correlated with the natural logarithm of
(Account payable+1) after controlling for the firm size.
Hypothesis 6: The inventory level is positively correlated with Account payable after
controlling for the firm size.
1
https://appleinsider.com/articles/12/05/31/apple_turns_over_entire_inventory_every_five_days
2
See COMPUSTAT for data source.1. Build a regression model to test Hypothesis 1. Does the data support Hypothesis 1? Explain
why.
2. Build a regression model to test Hypothesis 2. Does the data support Hypothesis 2? Explain
why.
3. Build a regression model to jointly test Hypotheses 1 and 2. Does the data support both in
this test? Explain why. Do you observe any issues?
4. Build a regression model to test Hypothesis 3. Does the data support Hypothesis 3? Explain
why.
5. Build a regression model to test Hypothesis 4. Does the data support Hypothesis 4? Explain
why. (Hint: you can “control” an independent variable simply by adding this variable into the
regression model.)
6. Build models to test Hypotheses 5 and 6. Which model is better? Why?
Next, we investigate the variables that are correlated with the inventory turnover.
Hypothesis 7: The inventory turnover is negatively correlated with the gross margin.
Hypothesis 8: The inventory turnover is positively correlated with the capital intensity.
Hypothesis 9: The inventory turnover is negatively correlated with the trade credit to
sales ratio.
7. Build a model to jointly test Hypotheses 7-9, with and without controlling for the firm size
measured by log(asset). Comment on the results and the insights you learn from the
regression model.
also an excel data file

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages

Regression, Basic Statistics

Related Discussions:- Regression

Sampling errors, what are the types of sampling errors and their causes?

Compute the maximum standard deviation, The specification for a plastic han...

Probabilities, 54% of teens own a music player, the probability that both t...

Cash flow analysis, Cash flow analysis In financial sales, an income rep...

Trial balance, paid installation charges of machinery rs1100

Find the probability, Question: (a) Find the number of different words...

Calculate the expected value, Imagine you are faced with the opportunity to...

Simple data analysis&comparison, Progect Guid: PROJECT 1: SIMPLE DATA ANA...

Stats, 1. A search engine site claims that, on average, one out of five vis...

What is an irrevocable letter of credit?, What is an irrevocable letter of ...

Write Your Message!

Featured Services

Online Tutoring

Project Development

Exam Preparation

Course Help

Assignment Help

Popular Subjects

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT