The corporate planning department in a large brewing company has been trying to develop a medium-term forecasting model relating to the demand for one of their products: a low-alcohol lager. The method used has been based around multiple regression. The department has collected and analysed data on a monthly basis for the last two years. All data has been seasonally adjusted and is based on constant prices. The variables currently under examination are:
C1 Lager sales, thousands of pints
C2 Number of pubs supplied
C3 Number of supermarkets and off-licences supplied
C4 Price of lager, pence per pint
C5 Price of beer, pence per pint
C6 A time trend increasing by 1 per month.
The results of the latest model are shown in Table 10.17.
You have been asked to summarise the current model for a report to be shown to the managing director, to interpret and evaluate the current model and to suggest possible improvements to the model or alternative methods of trying to forecast this variable.