Question 1

Construct a line chart for your given brand of beer. Comment on any features of interest.

Question 2

Estimate a model of volume of sales using a trend component. In other words, estimate the

following:

=  + 

Where yt = Volume of sales in period t

 T = Trend 

2

Comment on your findings. I.e. what is the interpretation of the coefficient estimates? How do your

findings for the trend variable compare to your observations in step 1? Are the variables statistically

significant? What about the overall model fit? [5 marks]

Note: To complete this step, you must create a trend variable.

Question 3

Refine the model you created in step 2 by adding a seasonal index. In other words, estimate the

following:

=  +  + 

Where SI = Seasonal Index

Are there any months that exhibit above average sales? What do you think is the reason? How do

your findings compare to your observations in step 1? You may wish to report the seasonal indices

you constructed. Comment on your findings. [10 marks]

Note 1: To complete this step, you must create a seasonal index.

Note 2: Including the seasonal index may cause the intercept to become statistically insignificant.

However, the intercept should be retained as the line chart indicates that the data does not pass

through the origin.

Question 4

In the year 2005 and later in 2012, the outbreak of a “killer yeast strain” – Saccharomyces Cerevisiae

- affecting the beer brewing process had a devastating impact. Known as ‘Gastroenteritis’ , the fear

of the virus quickly spread throughout the world causing people to avoid consumption of beer and

yeast-related beer products. Many (not all) brands of beer use yeast in their brewing process. How

do you think this yeast strain would affect the sales of your assigned brand? At the same time,

certain brands of beer do not use yeast in their production. How do you think their sales will be

affected?

Refine the model you created in step 3 by adding a dummy variable to represent the occurrence of

‘Gastroenteritis’. In other words, estimate the following:

=  +  + 

 + 

 + 

Where 

 = Disease dummy variable for the 2003 period

And 

= Disease dummy variable for the 2010 period

What is the overall impact of the disease between the two periods? How do your findings compare

to your observations in step 1? Comment on your findings. [10 marks]

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