Summary 173- In preparation for their 2008 merger, Delta Airlines and Northwest
Airlines undertook a comparative study of their on-time performance.
The following table shows each airline’s on-time record for a common
two-month period for three cities where they both operated.
Delta Airlines Flights Northwest Airlines Flights
Total Late Total Late
New York 1987 484 399 120
Chicago 718 118 1123 222
Memphis 193 24 536 70
Total 2898 626 2058 412a. Northwest’s operations executives claim to have superior overallon-
time results. Does the data support this claim?
b. Delta’s executives respond by pointing to its superior performance at
key cities. Does the data support this claim?
c. Explain carefully how to reconcile your answers in parts (a) and (b).
In your view, which is the better measure of performance—an
aggregate measure or a disaggregate measure?- The following table lists your company’s sales during the last four years.
Year 1 Year 2 Year 3 Year 4
Sales 100 110 105 120a. A fellow manager points to the 15-unit increase between year 3 and
year 4. Extrapolating this trend, he predicts 135 units will be sold in
the coming year (year 5). Do you agree? Explain.
b. A second manager notes that annual sales increases have averaged
(120 100)/3 6.67 units per year. Accordingly, his forecast for the
coming year is 126.67 units sold. Do you agree with this prediction?
Explain.- Consider again the data in Problem 10.
a. Using a computer program, estimate the linear increasing trend
equation, S a bt, using OLS regression.
b. According to your regression statistics, how well does your estimated
equation explain past variations in sales?
c. Use your equation to forecast sales in the coming year. What margin
of error would you attach to your forecast? - As the name suggests, a lagging indicator is an economic variable whose
movements occur after movements in the overall economy.
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