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Practice Problem 1: Maxs Slice Problem | Week 4 Practice Problems | CTL.SC1x Courseware | edX

MITx: CTL.SC1x Supply Chain Fundamentals

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Practice Problem 1: Maxs Slice Problem

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PRACTICE PROBLEM 1: MAXS SLICE PROBLEM

On April 1, 2014, Max opened Maxs Slice in Kendall Square to cater to
the nearby MIT student population. Frustrated by throwing out unsold
pizzas or conversely running out of supplies as students lined up around

Week 1:
Overview of
Supply Chain
Management &
Logistics

the corner, Max decided to start tracking his pizza sales from May 1 to July
31. In order to more accurately predict pizza sales, Max has contacted you
to help develop a regression, so he can better predict future sales. Click
hereto download the Excel Data and herefor the LibreOffice data. For
this problem, please enter all numerical responses to three decimal
places.

Week 2:
Forecasting I Introduction
Week 3:
Forecasting II Exponential
Smoothing

Part 1A
Max thinks that his pizza chain is beginning to generate some buzz with
the MIT students and that sales are going up with time. Run a regression
against time only to determine how many additional pizzas are sold each
day. What is the
? Please state your answer to three decimal places.

Week 4:

Forecasting III
- Special Cases
& Extensions

Answer: 0.757

Welcome to Week
4
Lesson 1: Causal
Analysis

EXPLANATION

Lesson 2: New
Product &
Intermittent
Demand
Forecasting

The
value is determined by using the LINEST function to regress
time against pizza sales. It is telling us how much of the variability in
the dependent variable (Number of Pizzas) can be explained by the
independent variables (the number of days).

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Week 4 Practice
Problems
Supplemental
Materials for
MicroMasters
Week 4 Graded
Assignment

Even if your answer was accepted - use our value of 0.757 for the next
part. The solution is shown in spreadsheet form in part 1.2.

You have used 3 of 3 submissions

Part 1B

Homework due Mar

16, 2016 at 15:00 UTC

Week 5:
Inventory
Management I
- Deterministic
Demand

What is the adjusted

three decimal places.

for this problem? Please state your answer to

Answer: 0.755

EXPLANATION

We can then use the following formula to solve for

adjusted

The solution is shown in spreadsheet form in the next problem.

You have used 3 of 3 submissions

Part 2
About how many additional pizzas are sold each day? That is, what is the
daily trend for the number of pizzas sold each day? Please state your
answer to three decimal places.

Answer: 0.648

EXPLANATION

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Practice Problem 1: Maxs Slice Problem | Week 4 Practice Problems | CTL.SC1x Courseware | edX

Using the LINEST function, we find that approximately 0.648 pizzas are
sold each day. After performing a t-test, we see that this value is
significant at a p-value of 0.01. The solution can be found in Excel
form here and LibreOffice here. See the solution slides for Excel and
LibreOffice .

You have used 3 of 3 submissions

Part 3
Max has read that pizza sales are highest on Fridays and Saturdays? Using
a regression that includes both time (days) and a dummy variable for
weekend sales, how many additional pizzas are sold on Fridays and
Saturdays. Please state your answer to just one decimal place.

Answer: 15.0

EXPLANATION

Using dummy variables for weekends, we can look at pizzas sold

against weekends and time with the LINEST function. In this case,
nearly 15 additional pizzas are sold on the weekends. We see that
both time and weekends are significant at a p-value of 0.01. See the
solution slides for Excel and LibreOffice.

You have used 3 of 3 submissions

Part 4
Finally, Max has heard that Mondays and Tuesdays are the slowest days
for the restaurant industry, so he has experimented by offering a deal on
these days in June and July. Running a regression include time, weekends,
and this discount, determine the p-value as a percentage associated with
sales on days with the discount. (Enter your answer without a % sign i.e.
12.3 rather than 12.3%.)

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Answer: 19.719

EXPLANATION

Running a third regression, we see that days with the discount sell 2.8
pizzas less than other days. But once we check the p-value, we see
that the discount is not significant under a p-value threshold of 0.01.
See the solution slides for Excel and LibreOffice.

You have used 3 of 3 submissions

Part 5
What variable(s) to you recommend that Max use to predict pizza sales?
(multiple choice)
Time only
Discount Only

Weekend Only
Time and Discount
Time and Weekend

Weekend and Discount

Time, Weekends and Discount
There is not enough data to predict pizza sales

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EXPLANATION

Using a p-value threshold of 0.01, we see that time and weekend are
the best predictors of pizza sales. We find that this regression has an
value of 0.8712, which is pretty good. Adding in the discount, we
increase our

value only slightly, but the discount dummy

variable is not significant. Either way, it is not worth complicating the

regression with a new explanatory variable for only a slight increase in
.
You may have found other factors to be significant such as the square
of a variable or the product of two variables, but in this case we want
to keep things simple.

You have used 3 of 3 submissions

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