WESTAR BEVERAGE SALES MULTIPLE REGRESSION Muhammad K. Rafi
EXPLORATION: TOPIC <ul><li>JANE BARTLEY-STAFF ANALYST FOR WESTAR'S CORPORATE PARENT </li></ul><ul><ul><li>SHE PREDICTS & A...
EXPLORATION: HOTEL BACKGROUND INFORMATION <ul><li>250-ROOM BUSINESS HOTEL LOCATED IN A RESORT AREA OF THE COLORADO ROCKIES...
EXPLORATION: WHY USE DUMMIES? <ul><li>REGRESSION ANALYSIS IS USED WITH NUMERICAL VARIABLES.  </li></ul><ul><li>RESULTS ONL...
EXPLORATION: WHY USE DUMMIES? <ul><li>SOCIAL SCIENTISTS OFTEN NEED TO WORK WITH CATEGORICAL VARIABLES IN WHICH THE DIFFERE...
EXPLORATION: WHY USE DUMMIES? <ul><li>THE SOLUTION IS TO USE DUMMY VARIABLES - VARIABLES WITH ONLY TWO VALUES, ZERO AND ON...
QUESTION <ul><li>SHOULD OTHER FACTORS SUCH AS:  </li></ul><ul><ul><li>SEASON,  </li></ul></ul><ul><ul><li>PROMOTIONAL FOOD...
RELEVANT FACTORS <ul><li>PROMOTIONAL FOOD -DISCONTINUED AFTER MONTH 12  </li></ul><ul><li>PIANO PLAYER-DISCONTINUED AFTER ...
HYPOTHESIS <ul><li>NULL: THE FACTORS OF ROOM, SEASON, PROMOTIONAL FOOD AND PIANO ARE INSIGNIFICANT IN RELATION TO SALES.  ...
DATA <ul><li>MONTH  Month number (month 1 was a January) </li></ul><ul><li>BEVTOTAL Total beverage sales (in $) pub and ni...
 
 
 
 
 
 
 
DATA ANALYSIS <ul><li>GOAL IS TO FIND IF ANY RELATIONSHIPS EXIST BETWEEN TOTAL SALES VS. ROOMS, SEASON, PROMOTIONAL FOOD, ...
DATA ANALYSIS <ul><li>THE VARIABLE THAT IS SIGNIFICANT: PROMOTIONAL FOOD  </li></ul><ul><li>HOW DOES TOTAL SALES CHANGE WI...
DATA ANALYSIS FINAL <ul><li>MULTIPLE REGRESSION ANALYSIS </li></ul><ul><li>IS THERE A RELATIONSHIP BETWEEN PROMO FOOD & TO...
RECOMMENDATIONS <ul><li>RECOMMEND TO USE THIS MODEL TO FORECAST TOTAL SALES SINCE IT IS BETTER THAN THE OLD MODEL </li></u...
RECOMMENDATIONS <ul><li>WESTAR SHOULD REVITALIZE IT’S CURRENT MARKETING STRATEGIES TO INCREASE HOTEL OCCUPANCY WHICH WOULD...
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Westar beverage sales

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Westar beverage sales

  1. 1. WESTAR BEVERAGE SALES MULTIPLE REGRESSION Muhammad K. Rafi
  2. 2. EXPLORATION: TOPIC <ul><li>JANE BARTLEY-STAFF ANALYST FOR WESTAR'S CORPORATE PARENT </li></ul><ul><ul><li>SHE PREDICTS & ANALYZES BEVERAGE SALES (LIQUOR, BEER, AND WINE) FOR THE CHAIN'S BUSINESS HOTELS </li></ul></ul><ul><ul><li>FORECAST NEEDED AT THE END OF THE WEEK </li></ul></ul><ul><ul><li>OTHER FORECASTING APPROACHES INEFFECTIVE </li></ul></ul><ul><ul><ul><li>PREVIOUS METHODS CONSIDERED ONLY ROOM </li></ul></ul></ul><ul><ul><ul><li>OCCUPANCY </li></ul></ul></ul><ul><ul><ul><li># OF PEOPLE STAYING IMPACTS BEVERAGE SALES </li></ul></ul></ul><ul><ul><ul><li>HOTEL OCCUPANCY PREDICTABLE </li></ul></ul></ul>
  3. 3. EXPLORATION: HOTEL BACKGROUND INFORMATION <ul><li>250-ROOM BUSINESS HOTEL LOCATED IN A RESORT AREA OF THE COLORADO ROCKIES </li></ul><ul><li>AVERAGE ROOMS RENTED/YR. 56,281 </li></ul><ul><li>AVERAGE BEVERAGE SALES/MO. $24,031 </li></ul><ul><li>HAS TWO LOUNGES ON PREMISES </li></ul><ul><ul><li>POUR NOUS LOUNGE- 50 SEAT PUB-STYLE LOUNGE </li></ul></ul><ul><ul><li>GAIETE - 200-SEAT NIGHTCLUB </li></ul></ul>
  4. 4. EXPLORATION: WHY USE DUMMIES? <ul><li>REGRESSION ANALYSIS IS USED WITH NUMERICAL VARIABLES. </li></ul><ul><li>RESULTS ONLY HAVE A VALID INTERPRETATION IF IT MAKES SENSE TO ASSUME THAT HAVING A VALUE OF 2 MEANS HAVING TWICE AS MUCH OF SOMETHING AS A 1 & HAVING A 50 MEANS 50 TIMES AS MUCH AS 1. </li></ul>
  5. 5. EXPLORATION: WHY USE DUMMIES? <ul><li>SOCIAL SCIENTISTS OFTEN NEED TO WORK WITH CATEGORICAL VARIABLES IN WHICH THE DIFFERENT VALUES HAVE NO REAL NUMERICAL RELATIONSHIP WITH EACH OTHER. </li></ul><ul><ul><li>EXAMPLES INCLUDE VARIABLES FOR RACE, POLITICAL AFFILIATION, OR MARITAL STATUS. </li></ul></ul><ul><ul><li>IF YOU HAVE A VARIABLE FOR POLITICAL AFFILIATION WITH POSSIBLE RESPONSES INCLUDING DEMOCRAT, INDEPENDENT & REPUBLICAN, IT OBVIOUSLY DOESN'T MAKE SENSE TO ASSIGN VALUES OF 1 - 3 AND INTERPRET THAT AS MEANING THAT A REPUBLICAN IS SOMEHOW 3 TIMES AS POLITICALLY AFFILIATED AS A DEMOCRAT. </li></ul></ul>
  6. 6. EXPLORATION: WHY USE DUMMIES? <ul><li>THE SOLUTION IS TO USE DUMMY VARIABLES - VARIABLES WITH ONLY TWO VALUES, ZERO AND ONE. IT DOES MAKE SENSE TO CREATE A VARIABLE CALLED &quot;REPUBLICAN&quot; AND INTERPRET IT AS MEANING THAT SOMEONE ASSIGNED A 1 ON THIS VARIABLE IS REPUBLICAN AND SOMEONE WITH AN 0 IS NOT. </li></ul><ul><li>A DUMMY VARIABLE IS ONE THAT TAKES THE VALUES 0 OR 1 TO INDICATE THE ABSENCE OR PRESENCE OF SOME CATEGORICAL EFFECT THAT MAY BE EXPECTED TO SHIFT THE OUTCOME. THINK OF IT AS A TRUTH VALUE REPRESENTED AS A NUMERICAL VALUE 0 OR 1 (AS IS SOMETIMES DONE IN COMPUTER PROGRAMMING). </li></ul>
  7. 7. QUESTION <ul><li>SHOULD OTHER FACTORS SUCH AS: </li></ul><ul><ul><li>SEASON, </li></ul></ul><ul><ul><li>PROMOTIONAL FOOD OFFERED DURING HAPPY HOUR </li></ul></ul><ul><ul><li>PRESENCE OR ABSENCE OF A PIANO PLAYER IN THE POUR NOUS LOUNGE </li></ul></ul><ul><ul><li>BE CONSIDERED IN FORECASTING BEVERAGE SALES. </li></ul></ul>
  8. 8. RELEVANT FACTORS <ul><li>PROMOTIONAL FOOD -DISCONTINUED AFTER MONTH 12 </li></ul><ul><li>PIANO PLAYER-DISCONTINUED AFTER MONTH 13 </li></ul><ul><li>DATA MONTHS 14 AND 15 UNAVAILABLE CHANGE IN RECORD-KEEPING DUE TO CHANGE IN OWNERSHIP </li></ul><ul><li>CAN NOT USE BEVTOTAL AND BEVPUB OR BEVNITE, AND SIMILARLY FOODTOTAL AND FOODPUB OR FOODNITE TO PREDICT TOTAL SALES </li></ul>
  9. 9. HYPOTHESIS <ul><li>NULL: THE FACTORS OF ROOM, SEASON, PROMOTIONAL FOOD AND PIANO ARE INSIGNIFICANT IN RELATION TO SALES. </li></ul><ul><li>ALT: THE FACTORS OF ROOM, SEASON, PROMOTIONAL FOOD AND PIANO ARE SIGNIFICANT IN RELATION TO SALES. </li></ul>
  10. 10. DATA <ul><li>MONTH Month number (month 1 was a January) </li></ul><ul><li>BEVTOTAL Total beverage sales (in $) pub and nightclub </li></ul><ul><li>BEVPUB Beverage sales (in $) for the Pour Nous Lounge </li></ul><ul><li>BEVNITE Beverage sales (in $) for the Gaiete night club </li></ul><ul><li>FOODTOT Total food expenditures (in $) pub and nightclub </li></ul><ul><li>FOODPUB Amount spent on food (in $) for the Pour Nous Lounge </li></ul><ul><li>FOODNITE Amount spent on food (in $) for the Gaiete night club </li></ul><ul><li>ROOMS Total room occupancy for the Westar </li></ul>
  11. 18. DATA ANALYSIS <ul><li>GOAL IS TO FIND IF ANY RELATIONSHIPS EXIST BETWEEN TOTAL SALES VS. ROOMS, SEASON, PROMOTIONAL FOOD, PIANO </li></ul><ul><li>MODEL TO PREDICT TOTAL SALES: </li></ul><ul><li>Final Equation: Y = -4895.8X + 31324 (X=0,1) </li></ul><ul><li>VALIDITY OF FINAL REGRESSION EQUATION: </li></ul><ul><li>Adjusted R Square: 22% </li></ul>
  12. 19. DATA ANALYSIS <ul><li>THE VARIABLE THAT IS SIGNIFICANT: PROMOTIONAL FOOD </li></ul><ul><li>HOW DOES TOTAL SALES CHANGE WITH EACH OF THE RELEVANT VARIABLES? </li></ul><ul><ul><li>OFFER THE PROMOTIONAL FOOD, THE TOTAL SALES WILL DECREASE </li></ul></ul><ul><ul><li>DO NOT OFFER THE PROMOTIONAL FOOD, THE TOTAL SALES WILL INCREASE. </li></ul></ul>
  13. 20. DATA ANALYSIS FINAL <ul><li>MULTIPLE REGRESSION ANALYSIS </li></ul><ul><li>IS THERE A RELATIONSHIP BETWEEN PROMO FOOD & TOTAL SALES? </li></ul><ul><li>MULTIPLE R: 0.499 </li></ul><ul><li>R SQUARED: 25% </li></ul><ul><li>ADJUSTED R SQUARED: 22% </li></ul><ul><li>STANDARD ERROR: 4396.37 </li></ul><ul><li>SIGNIFICANCE: 68.25 E-5 </li></ul><ul><li>P VALUE: 68.25 E-5 </li></ul><ul><li>INTERCEPT: 31323.67 </li></ul><ul><li>SLOPE: -4895.82 </li></ul><ul><li>F VALUE: 8.64 </li></ul>
  14. 21. RECOMMENDATIONS <ul><li>RECOMMEND TO USE THIS MODEL TO FORECAST TOTAL SALES SINCE IT IS BETTER THAN THE OLD MODEL </li></ul><ul><li>FINAL R 2 =22% VS. OLD R 2 =9% </li></ul><ul><li>CONTINUE TO COLLECT MORE DATA </li></ul><ul><li>DO NOT OFFER PROMOTIONAL FOOD SINCE IT DECREASES SALES </li></ul>
  15. 22. RECOMMENDATIONS <ul><li>WESTAR SHOULD REVITALIZE IT’S CURRENT MARKETING STRATEGIES TO INCREASE HOTEL OCCUPANCY WHICH WOULD THEN INCREASE TOTAL BEVERAGE SALES </li></ul><ul><li>THE MAXIMUM OCCUPANCY WAS 6,331 VS. CAPACITY 7,500*/MONTH FOR 1 OUT OF THE 28 MONTHS OF DATA </li></ul><ul><li>*250 ROOMS X 30 DAYS/MONTH=7,500 </li></ul>

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