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Airline forcasting case study 2014




Question;[1]Qnt. 5040 ? Business Modeling;Forecasting Case;Study;Dr. Phillip S. Rokicki;Individual Case Study = Maximum point value = 35 points;Date Due: See the;Monthly/Weekly Calendar for your Section for the date the report is due;Introduction;Planning for the future is a vital task for all business;managers. As part of that process this;course has provided you with a number of tools that you can use to make smart;business decisions. One of these;techniques is to use software forecasting tools, such as Palisades StatTools;to create defensible forecasts. This;exercise will allow you to create different forecasts for two major airline;companies.;Background on the;Study;Dramatic changes to airline industry revenues have forced;management at most U.S. airlines to review many long-standing business;approaches. The rapid growth of low cost;carriers (LCCs) and shifts to Internet distribution channels put downward;pressure on airfares and, in turn, airline revenues. Many of these changes accelerated as airline;revenues began falling behind their historic relationship with the Gross;Domestic Product since late 2000. Ancillary;revenues have become a critical source to individual airlines as can be seen by;the various and expensive options for checking baggage, selecting priority and;desirable seats, etc.;This exercise provides you historic data from 1995;through 2013 for two important airlines, Delta Airlines and Southwest;Airlines. Delta, as you probably;know, is a full service airline flying internationally and is one of the;nation?s largest air carrier. Southwest;has a long history of low-cost, low frills service to generally smaller or;regional airports, although that has changed somewhat over the past years.;Both airlines invest heavily in projecting out the future;passenger load (the number of passengers;carried for X miles). Data from the;Massachusetts Institute of Technology?s Airline;Data Project[2];has been used for this case study, and is not covered by any implied;copyright. Only several parts of the;data for these two airlines has been used in this case study and is available;with the accompanying Excel Spreadsheet;? Airline;Forecasting Case Study.;There are many other factors that impact making an accurate forecast for;future passenger load, but for this exercise the only factor used for both;airlines is their operating revenue (all amounts in billions of dollars).;Your tasks for this Airline;Forecasting case study;You are to create a 3 year forecast, from 2014 through 2016 for both Delta and Southwest airlines that;uses the following forecasting and statistical techniques;Remember to analyze each of;these outputs and include them in the body of the report where you discuss and;analyze them.;1.;The one variable summary for both airlines in;StatTools ? analyze the results for the two companies, do not just put the;output in the report without completely analyzing the results for both airlines.;2.;The runs test to determine if the airline data;is random or not.;3.;The Q-Q plot to determineif the data for;both airlines (each done separately) is relatively normal or not.;4.;The annual box and whisker plot for both airlines.;5.;A histogram for;both airlines (to be done separately) to determine how the earnings data;appears.;6.;The moving average with a span of 3 ?in this case it will be 3;years.;7.;The simple exponential smoothing forecast.;8.;The Holt?s linear method for trends (seasonalized);and the Holt?s linear method deseasonalized.;Both methods are required.;9.;NOTE: The Wintersmethod;for trends and seasonality will not work for annual data, thus it is NOT;required for this case study.;To decide which of these has;the best forecast for both airlines you will concentrate on the following;results as provided by the StatTools software;1.;The mean absolute;error (MAE) of each forecasting;technique;2.;The root mean;square error (RMSE) of each;forecasting technique;3.;The mean absolute;percentage of error (MAPE) of each;forecasting technique;4.;The average and;cumulative error (see slides 81 to 83 from week 7 PowerPoint);5.;Which forecasting;technique best follows the actual earnings line, and provides the best;forecasted earnings. NOTE: This technique may be different;for the two airlines.;6.;NOTE: You MUST;include the Airline;Forecasting Data ? Table One(page;one of the Excel file) completed with the forecast for the years 2014 though;2016 for both airlines.;Important things you need to know;1.;You may assume;that both companies fiscal year goes;from January;to December.[3];2.;All operating revenue are in billions of dollars, thus 11.22 = $11,220,000,000;in operating revenue for that year.;Your Tasks;1.;Carry out the;various statistical tests as indicated above.;2.;Analyze the;resulting data, and determine which of the forecasting techniques provides the;best forecast for each airline, and why.;3.;Report on each of;these forecasting techniques in your report, explaining what you did, what you;found out, and how you decided which forecast is the best.;4.;Put the relevant;output graphs, tables and figures INTO;the report and discuss them where they are placed in the report. Do NOT just put the output into the Appendix;or in the attachment of the report. OUTPUT figures MUST;be included and discussed in the report itself.;5.;Forecast the next three years of operating revenue for;both airlines.;6.;Submit your;individual report on time as determined by your section?s Monthly/Weekly;Calendar.;Write a management report;(using the required format) suggesting and justifying an appropriate decision;regarding the sales forecast. In your;report, analyze the patterns of the annual time series, discuss the properties;of each forecasting model and their relevance to predicting the series, select;the best forecasting models for the series, make your recommendations;supported by arguments which are further supported by references to model;results and tables or figures in your report.;Independent outside research is encouraged to provide relevant;background information and/ or to provide more support for your arguments.;Please make sure that you use;the Assignment Cover Sheet as the;first page of your report and the Grading;Rubric as the second and third pages of your report (available on BB).;Please, embed your Excel spreadsheet showing the appropriate calculations and;charts into the Appendix section of;your report. How to embed a file into a;Word document is explained in Format of a Management Report. (Available on BB);Submit this report into the Assignment Dropbox.;[1];Logos of the respective airlines are the property of those airlines and no;copyright is implied.;[2];You may access this complete data at:;[3];The company?s actual fiscal year may be different than this assumption, but for;this exercise you will use this fiscal year information.


Paper#60660 | Written in 18-Jul-2015

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