Question

Refer to the tutoring franchise dataset in this section.

What is the forecast for 2023 using naive forecasting?

Answer 1

The forecast for 2023 using naïve forecasting can be calculated using a regression model that predicts sales growth based on the day. By substituting the corresponding day values into the equation, we can find the predicted sales for those days.

Step-by-step explanation:

To forecast using the naïve forecasting method, you simply use the most recent observation as the prediction for the future. In this case, the most recent observation is the sales growth in the first quarter of the new year (January through March). The model predicts sales growth using the equation ŷ = 101.32 + 2.48x, where ŷ is in thousands of dollars and x is the day.

1. To predict sales on day 60, substitute x = 60 into the equation: ŷ = 101.32 + 2.48(60) = 253.12 thousand dollars.
2. To predict sales on day 90, substitute x = 90 into the equation: ŷ = 101.32 + 2.48(90) = 361.52 thousand dollars.