Compute the quantity demanded forecast for the new product

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Reference no: EM132862157

Question 1: A policy analyst tasked by a government office to forecast demand for a new product has two sets of data in her file: (a) monthly demand in the Philippines for the new product in terms of number of units per thousand in the previous year (February to December), and (b) supply of a complimentary good in other Southeast Asian countries (average of the first three months of this year) which has been shown to be correlated with demand for the new product in these Southeast Asian countries, including the Philippines (average of the first three months of this year, in '000 ). Both sets of data are shown below:

Quantity demanded of the new product last year (in '000)

Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
22.6	24.5	25.1	25.7	24.8	26.6	26.9	27.7	27.0	28.1	28.9

Quantity supplied of the complementary good (X) and quantity demanded of the new product (Y) in Southeast Asian counties (average of the first three months of this year, in '000)

	BN	KH	ID	MY	SG	TH	VN	PH
Comp (X)	128.7	131.3	138.9	140.2	134.5	143.8	145.6	139.7
New (Y)	22.6	24.5	25.1	25.7	24.8	26.6	26.9	?

a. Compute the quantity demanded forecast for the new product in the Philippines for June of this year using linear trend estimation of the values of quantity demanded of the new product from January through December of last year.

b. Compute the quantity demanded forecast for the new product in the Philippines (average for the first three months of current year) using linear regression based on the values of quantity supplied of the complementary good in the Southeast Asian countries. Also, compute for the Pearson correlation coefficient and interpret the relationship in terms of nature and strength of the relationship.

Reference no: EM132862157

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