III. Mathematical Modeling
FD Model
Our original mathematical formula for calculating FD is:
FD =
TID * MS = TID * RD/N
By substituting our new models and using N=10, we arrive at the following:
FD = (-445.17*AvgPrice + .2627*AvgAdv +164336.17)*( -16.44*PREL + .7796*AREL + .5334RD1 + 16.13)/10
From this formula we are now able to more accurately predict the Firm’s Demand for the coming quarter. For comparison purposes, we will include the model that only uses Quarter to predict TID, which is:
FD = (646*Qtr
+14218)*( -16.44*PREL + .7796*AREL + .5334RD1 + 16.13)/10
The attached spreadsheet allows the user to play “what-if” scenarios by plugging in the different values to yield the demand.