Question

To ensure that as many trial subscriptions to the 3-For-All service as possible are converted to regular subscriptions, the marketing department works closely with the customer support department to accomplish a smooth initial process for the trial subscription customers. To assist in this effort, the marketing department needs to accurately forecast the monthly total of new regular subscriptions. A team consisting of managers from the marketing and customer support departments was convened to develop a better method of forecasting new subscriptions. Previously, after examining new subscription data for the prior three months, a group of three managers would develop a subjective forecast of the number of new subscriptions. Livia Salvador, who was recently hired by the company to provide expertise in quantitative forecasting methods, suggested that the department look for factors that might help in predicting new subscriptions. Members of the team found that the forecasts in the past year had been particularly inaccurate because in some months, much more time was spent on telemarketing than in other months. Livia collected data (stored in AMS13) for the number of new subscriptions and hours spent on telemarketing for each month for the past two years. 1. What criticism can you make concerning the method of forecasting that involved taking the new subscriptions data for the prior three months as the basis for future projections? What factors other than the number of telemarketing hours spent might be useful in predicting the number of new subscriptions? Explain. a. Analyze the data and develop a regression model to predict the number of new subscriptions for a month, based on the number of hours spent on telemarketing for new subscriptions. b. If you expect to spend 1,200 hours on telemarketing per month, estimate the number of new subscriptions for the month. Indicate the assumptions on which this prediction is based. Do you think these assumptions are valid? Explain. c. What would be the danger of predicting the number of new subscriptions for a month in which 2,000 hours were spent on telemarketing? Hours New Subscriptions 1224 5357 1458 6177 1006 4795 1395 5692 1131 4312 921 3421 704 2624 1154 4087 1168 4934 803 2546 830 3591 981 4271 1435 5836 1349 5201 965 3775 985 3592 1117 4566 840 2974 1412 5673 940 3554 1090 4399 1498 6143 1240 4827 1055 5418

To ensure that as many trial subscriptions to the 3-For-All service as possible are converted to regular subscriptions, the marketing department works closely with the customer support department to accomplish a smooth initial process for the trial subscription customers. To assist in this effort, the marketing department needs to accurately forecast the monthly total of new regular subscriptions.

A team consisting of managers from the marketing and customer support departments was convened to develop a better method of forecasting new subscriptions. Previously, after examining new subscription data for the prior three months, a group of three managers would develop a subjective forecast of the number of new subscriptions. Livia Salvador, who was recently hired by the company to provide expertise in quantitative forecasting methods, suggested that the department look for factors that might help in predicting new subscriptions. Members of the team found that the forecasts in the past year had been particularly inaccurate because in some months, much more time was spent on telemarketing than in other months. Livia collected data (stored in AMS13) for the number of new subscriptions and hours spent on telemarketing for each month for the past two years.

1. What criticism can you make concerning the method of forecasting that involved taking the new subscriptions data for the prior three months as the basis for future projections? What factors other than the number of telemarketing hours spent might be useful in predicting the number of new subscriptions? Explain.

a. Analyze the data and develop a regression model to predict the number of new subscriptions for a month, based on the number of hours spent on telemarketing for new subscriptions.

b. If you expect to spend 1,200 hours on telemarketing per month, estimate the number of new subscriptions for the month. Indicate the assumptions on which this prediction is based. Do you think these assumptions are valid? Explain.

c. What would be the danger of predicting the number of new subscriptions for a month in which 2,000 hours were spent on telemarketing?

Hours
New Subscriptions
1224
5357
1458
6177
1006
4795
1395
5692
1131
4312
921
3421
704
2624
1154
4087
1168
4934
803
2546
830
3591
981
4271
1435
5836
1349
5201
965
3775
985
3592
1117
4566
840
2974
1412
5673
940
3554
1090
4399
1498
6143
1240
4827
1055
5418

Added by Ver-Nica F.

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