BUS 5030: Applied Economics and Statistics

Module 5: Milestone 2 Worksheet

Understanding the Product and the Environment Worksheet
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Ja’afar Yazid

Nexford University

BUS 5030: Applied Economics and Statistics

Dr. Michael McGivern

23rd December, 2021

 BUS 5030: Applied Economics and Statistics
Module 5: Milestone 2 Worksheet
Understanding the Product and the Environment Worksheet
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Complete this Milestone 2 worksheet using the directions within to guide you. Submit your completed worksheet in the “Assignment
and Grades” tab in your course menu. When you have submitted this assignment for grading, please return to Module 5 for a module
wrap-up.

Recall that you’ve been hired by an umbrella manufacturing company to answer these four questions:
● Is the economy growing?
● Is the population growing?
● What is the forecast for economic growth?
● What is the climate (weather) like for selling umbrellas?

In this assignment, you will consider the question, “What is the climate (weather) like for selling umbrellas?” for the country you
previously chose in Milestone 1.

Understanding the Product and the Environment Worksheet

Directions: Answer the following questions.

What are the important factors (sun, rain, etc.) in selling umbrellas?

● Statistical technique you would use:

● Reason for using the statistical technique:
● Application of the statistical technique:
When selling umbrellas, factors such as rainfall and temperature need to be considered as they decide the demand for umbrellas. During the rainy
season, there is high demand for umbrellas because they are used as a precaution for getting soaked in water which helps to prevent one from falling
sick. When it is sunny, the demand drops significantly even though there is still little need for it.
1. I will use the multiple linear regression technique.
2. The multiple linear regression technique is used to explain the relationship between the dependent variable (response) and independent
 BUS 5030: Applied Economics and Statistics
Module 5: Milestone 2 Worksheet
Understanding the Product and the Environment Worksheet
Obj100

variable (explanatory). The method is best because we have two independent variables. The number of umbrellas sold is the dependent
variable while the amount of rainfall and temperature are our independent variables.
3. Using date of the average temperature and rainfall of Togo retrieved from (World Bank Togo, n.d), the relationship between the number of
umbrellas sold, the average temperature and rainfall was examined between 1991-2020.
Month Number of Average rainfall Average
Umbrella(thous (mm) Temperature
ands) (C)
January 84 4.76 27.23
February 250 17.84 29.21
March 1500 51.29 30.08
April 1800 94.41 29.37
May 2300 132.08 28.12
June 2500 156.5 26.59
July 4000 177.67 25.55
August 4500 189.09 25.17
September 5000 203.88 25.8
October 3900 123.49 26.73
November 373 19.92 27.58
December 104 6.08 27.11

SUMMARY OUTPUT

Regression Statistics
0.9557124
Multiple R 2
0.9133862
R Square 3
Adjusted R Square 0.8941387
 BUS 5030: Applied Economics and Statistics
Module 5: Milestone 2 Worksheet
Understanding the Product and the Environment Worksheet
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3
588.77141
Standard Error 8
Observations 12

ANOVA
Significance
  df SS MS F F
Regression 2 32900574.9 16450287.4 47.4547897 1.6563E-05
Residual 9 3119866.04 346651.783
Total 11 36020440.9      

Coefficient Standard Lower Upper

  s Error t Stat P-value Lower 95% Upper 95% 95.0% 95.0%
2266.5931 11632.34
Intercept 8 4140.18519 0.54746179 0.59737382 -7099.1564 11632.3428 -7099.1564 28
28.54722
Average rainfall (mm) 21.783936 2.98975265 7.28620008 4.6326E-05 15.0206456 28.5472264 15.0206456 64
245.5002
Average Temperature (c) -80.75117 144.221356 -0.5599113 0.58920204 -407.00254 245.500203 -407.00254 03
The results from the multiple regression shows that our intercept weight is 2266.59. Rainfall has a weight of 21.78 while Temperature
has a weight of -80.75. This indicates rain is much more significant in comparison to temperature implying that temperature has little or
no influence on sales of umbrellas. The result of R Square 91.3% is good since it is above 90% the general benchmark for a good R
square reading.
 BUS 5030: Applied Economics and Statistics
Module 5: Milestone 2 Worksheet
Understanding the Product and the Environment Worksheet
Obj100

How much does rainfall vary over the year?

● Statistical technique you would use:

● Reason for using the statistical technique:
● Application of the statistical technique:
1. My technique of knowing how much rain varies will be variance.
2. Variance will be helpful in measuring how far the monthly rainfall data in the set is from the mean and also from every other
rainfall data in the whole set. The result will show how much the amount of rainfall will be by measuring variance of each month
3. Average rainfall data (1991-2020) from (World Bank Togo, n.d) data was used to calculate how much rainfall varies over the
year.
Month Average
rainfall(m
m)
January 4.76
February 17.84
March 51.29
April 94.41
May 132.08
June 156.5
 BUS 5030: Applied Economics and Statistics
Module 5: Milestone 2 Worksheet
Understanding the Product and the Environment Worksheet
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July 177.67
August 189.09
September 203.88
October 123.49
November 19.92
December 6.08

Average Rainfall (mm)

250
200
150
100
50
0
y y il y e ly t r
u ar uar rch Apr Ma Jun Ju g u s be ber ber ber
r a u m o
n
Ja Feb M A te
O ct vem cem
p e
Se No D

Mean 98.0841667
Standard Error 21.8376293
Median 108.95
Mode #N/A
Standard Deviation 75.647767
Sample Variance 5722.58464
Kurtosis -1.7310142
Skewness 0.00217125
 BUS 5030: Applied Economics and Statistics
Module 5: Milestone 2 Worksheet
Understanding the Product and the Environment Worksheet
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Range 199.12
Minimum 4.76
Maximum 203.88
Sum 1177.01
Count 12
Largest(1) 203.88
Smallest(1) 4.76
Confidence Level(95.0%) 48.064298

A large variance indicates that the numbers are from the mean and also far from each other while a small variance is the vice versa.
Using an excel calculator, we can see that our variance is 5722.58 which is quite high. This means that there is huge difference or
variation in the amount of rainfall in some months. The chart also shows that there is high rainfall between the months of April to
October while the months of January, February, March, November, and December experience the least rainfall.
How much does temperature vary over the year?

● Statistical technique you would use:

● Reason for using the statistical technique:
● Application of the statistical technique:
1. My technique of knowing how much rain varies will be variance.
2. Variance will be helpful in measuring how far the average monthly temperature data in the set is from the mean and also
from every other temperature data in the whole set. The result will show how much the amount of rainfall will be by
measuring variance of each month
3. Average temperature data (1991-2020) from (World Bank Togo, n.d) was used to calculate how much rainfall varies over the
year.
 BUS 5030: Applied Economics and Statistics
Module 5: Milestone 2 Worksheet
Understanding the Product and the Environment Worksheet
Obj100

Months Average
Temperature (C)
January 27.23
February 29.21
March 30.08
April 29.37
May 28.12
June 26.59
July 25.55
August 25.17
September 25.8
October 26.73
November 27.58
December 27.11
 BUS 5030: Applied Economics and Statistics
Module 5: Milestone 2 Worksheet
Understanding the Product and the Environment Worksheet Obj100

Average Rainfall (mm)

250

200

150

100

50

0
ry ry il ay ne ly t r
er r r
a ua
ch r
Ju us be be be
nu ar Ap M Ju g m ob
Ja br M Au e ct e m em
Fe pt O v c
Se No De

Mean 27.3783333
Standard Error 0.45275225
Median 27.17
Mode #N/A
Standard Deviation 1.56837979
Sample Variance 2.45981515
Kurtosis -0.8482722
Skewness 0.3558169
Range 4.91
Minimum 25.17
Maximum 30.08
 BUS 5030: Applied Economics and Statistics
Module 5: Milestone 2 Worksheet
Understanding the Product and the Environment Worksheet
Obj100

Sum 328.54
Count 12
Largest(1) 30.08
Smallest(1) 25.17
Confidence Level(95.0%) 0.99650097

Using an excel calculator for the descriptive statistics, variance is 2.46 which is very low and this shows that there is no huge difference
or variance in the average temperature for every month of the year. Temperature is at its highest from January to March.

How would you forecast rain based on past predictions? Why?

 Statistical technique you would use:

 Reason for using the statistical technique:
 Application of the statistical technique:
1. To forecast rain based on past predictions in Togo, the technique I`ll use will be the Exponential Smoothing.
2. Forecasts made using the above technique are weighted average of past time-series with weights reducing as the data gets
older. This technique is a means of predicting future events.
3. The data is retrieved from (World Bank Togo, n.d) to calculate how temperature varies with smoothed values written under
projected rainfall.

Month Average rainfall (mm)

January 4.76
February 17.84
March 51.29
April 94.41
May 132.08
 BUS 5030: Applied Economics and Statistics
Module 5: Milestone 2 Worksheet
Understanding the Product and the Environment Worksheet
Obj100

June 156.5
July 177.76
August 189.09
September 203.88
October 123.49
November 19.92
December 6.08

Exponential Smoothing
250
Average Rainfall (mm)

200
150 Actual
100 Forecast
50
0
1 2 3 4 5 6 7 8 9 10 11 12
Month

We can see the results from the excel calculator with a constant of 0.5 represented on the graph above. We can see that they might be a
decrease from the month of February to September and an increase from October to December.
 BUS 5030: Applied Economics and Statistics
Module 5: Milestone 2 Worksheet
Understanding the Product and the Environment Worksheet
Obj100

List the reference information for the internet research you used for your research. (A minimum of one reference must be provided.)

World Bank Togo. (n.d.). World Bank Climate Change Knowledge Portal. Retrieved December 24, 2021, from
https://climateknowledgeportal.worldbank.org/country/togo