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