Login

Create Account
+14156709189
info@expertsmind.com
Submit Homework/Assignment
Get quote & make Payment
Get Solution
Regression, Basic Statistics
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
http://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 79, 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
Posted Date: 3/11/2013 8:14:34 AM  Location : Hong Kong
Ask an Expert
Related Discussions:
Regression, Assignment Help, Ask Question on Regression, Get Answer, Expert's Help, Regression Discussions
Write discussion on Regression
Your posts are moderated
Write your message here..
Related Questions
Normal curve and the standard deviation, What is the relationship between t...
What is the relationship between the normal curve and the standard deviation? Name and explain three special features of a normal distribution
Define mean, Explain what central tendency and variability are. In your ans...
Explain what central tendency and variability are. In your answer define what the mean, median, mode, variance, and standard deviation are. What is the difference between the descr
Characteristics of data in statistics, Important Characteristics of Data ...
Important Characteristics of Data Center  The representative or average value which indicates where the middle of the data is located. Variation  the measur
Is venus geologically active, Is Venus geologically active? It is almost ...
Is Venus geologically active? It is almost certain that Venus, a planet almost of the same size as earth is geologically active. Recent studies show that there is Volcanic and t
What is Full form of FRS, AFRS  Talk about AGENCY FINANCIAL REPORTING SYST...
AFRS  Talk about AGENCY FINANCIAL REPORTING SYSTEM.
conversion process from gaap to ifrs, When do you think the conversion pro...
When do you think the conversion process should start? Manager 1 : The conversion process from GAAP to IFRS will be a big challenge. There are a lot of differences between the
ANOVA, This problem will introduce the learner into a technique called Anal...
This problem will introduce the learner into a technique called Analysis of Variance. For this course we will only conduct a simple OneWay ANOVA and touch briefly on the importan
Correlation'' Pearson, definitions
definitions
Hydrogen, Can Hydrogen be liquefied at room temperature
Can Hydrogen be liquefied at room temperature
Combination and permuations, Alarm units are to be connected at four fixed ...
Alarm units are to be connected at four fixed positions along a pipeline. In how many ways can the four available alarm unites be connected to the four positions along the line?
Assignment Help
Accounting Assignment Help
Economics Assignment Help
Finance Assignment Help
Statistics Assignment Help
Physics Assignment Help
Chemistry Assignment Help
Math Assignment Help
Biology Assignment Help
English Assignment Help
Management Assignment Help
Engineering Assignment Help
Programming Assignment Help
Computer Science Assignment Help
IT Courses and Help
ExpertsMind Services
Online Tutoring
Projects Assistance
Exam Preparation
Coursework Help
Programming Courses
Engineering Courses
Why Us ?
~Experienced Tutors
~24x7 hrs Support
~Plagiarism Free
~Quality of Work
~Time on Delivery
~Privacy of Work