Eco 550 Making Decisions Based On Demand And Forecasting

Amy HemphillDr. FauxECO 550Making Decisions Based on Demand and ForecastingJuly 21, 2013Interpret the coefficient of determination, indicating how it will influence your decision to open the pizza business in your town or community. Explain any additional variables that may improve the coefficient of determination.The coefficient of determination is a measure of the proportion of total variation in the dependent variable that is explained by the independent variable. (McGuigan, 2011, p. 113) The higher the coefficient of determination, the better the variance that the dependent variable is explained by the independent variable. The coefficient of determination is the overall measure of the usefulness of a regression. (www.coefficientofdetermination.com) The independent variables used to analyze coefficient of determination here were the average income of food service manager and the average price of pizza in a time series regression analysis. Based on the data the percent change of the sales is explained by R square percent of 42% change in demand of pizza as in relation to income. This means as income goes up so does the demand for pizza. There is also a positive coefficient between the independent variables