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Project evaluation and feasibility analysis

# Project evaluation and feasibility analysis

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This is the soultuon manual of Parsana Chandara book " Project evaluation and feasibility analysis", this manual is created by Mr. Iftikhar Mubbashir, Instructor at Paf-Kiet city campus.
This is the soultuon manual of Parsana Chandara book " Project evaluation and feasibility analysis", this manual is created by Mr. Iftikhar Mubbashir, Instructor at Paf-Kiet city campus.

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11/12/2012

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Problems’ Solutions Project Evaluation
Chapter 4 MARKET AND DEMAND ANALYSIS
1. We have to estimate the parameters
a
and
b
in the linear relationship
=
a
+
bT
Using the least squares method.According to the least squares method the parameters are:

T Y
–
n T Y

b
=

2
–
n T
2

a
=
–
bT
The parameters are calculated below:Calculation in the Least Squares Method
T Y TY
2
1 2,000 2,000 12 2,200 4,400 43 2,100 6,300 94 2,300 9,200 165 2,500 12,500 256 3,200 19,200 367 3,600 25,200 498 4,000 32,000 649 3,900 35,100 8110 4,000 40,000 10011 4,200 46,200 12112 4,300 51,600 14413 4,900 63,700 16914 5,300 74,200 196

= 105

= 48,500

TY =
421,600

2
=
1,015
= 7.5
= 3,464

T Y
–
n T Y
421,600 – 14 x 7.5 x 3,464
b
= =

2
–
n T
2
1,015 – 14 x 7.5 x 7.557,880= = 254227.5
a
=
–
bT
= 3,464 – 254 (7.5)= 1,559Thus linear regression is
= 1,559 + 254
2. In general, in exponential smoothing the forecast for
+ 1 is
+ 1
=
+
α

e
Where
+ 1
= forecast for year )
α
= smoothing parameter
e
= error in the forecast for year
=
S
=
1

is given to be 2100 and
α

is given to be 0.31 By M. Iftikhar Mubbashir The forecasts for periods 2 to 14 are calculated below:

Problems’ Solutions Project Evaluation
Period t Data (S
) Forecast (F
) Error (e
S
=F
)Forecast for t + 1(F
t + 1
= F
+
α
e
)
1 2,000 2100.0 -100
2
= 2100 + 0.3 (-100) = 20702 2,200 2070 130
3
= 2070 + 0.3(130) = 21093 2,100 2109.0 -9
4
= 2109 + 0.3 (-9) = 2111.74 2,300 2111.7 188.3
5
= 2111.7 + 0.3(188.3) = 2168.195 2,500 2168.19 331.81
6
= 2168.19 + 0.3(331.81) = 2267.76 3,200 2267.7 932.3
7
= 2267.7 + 0.3(9332.3) = 2547.47 3,600 2547.4 1052.6
8
= 2547.4 + 0.3(1052.6) = 2863.28 4,000 2863.2 1136.8
9
= 2863.2 + 0.3(1136.8) = 3204.249 3,900 3204.24 695.76
10
= 33204.24 + 0.3(695.76) = 3413.010 4,000 3413 587.0
11
= 3413.0 + 0.3(587) = 3589.111 4,200 3589.1 610.9
12
= 3589.1 + 0.3(610.9) = 3773.412 4,300 3772.4 527.6
13
= 3772.4 + 0.3(527.6) = 3930.713 4,900 3930.7 969.3
14
= 3930.7 + 0.3(969.3) = 4221.53. According to the moving average method
S
+
S
– 1

+…+
S
– n +1
+ 1
=
n
where
+ 1
= forecast for the next period
S
= sales for the current period
n
= period over which averaging is doneGiven
n
= 3, the forecasts for the period 4 to 14 are given below:
Period t Data (S
) Forecast (F
)Forecast for t + 1
t + 1
=
(
S
+ S
– 1
+
S
– 2
)/ 3

1 2,0002 2,2003 2,100
4
= (2000 + 2200 + 2100)/3 = 21004 2,300 2100
5
=(2200 + 2100 + 2300)/3= 22005 2,500 2200
6
= (2100 + 2300 + 2500)/3 = 23006 3,200 2300
7
= (2300 + 2500 + 3200)/3= 26677 3,600 2667
8
= (2500 + 3200 + 3600)/3 = 31008 4,000 3100
9
= (3200 + 3600 + 4000)/3 = 36009 3,900 3600
10
= (3600 + 4000 + 3900)/3 = 383310 4,000 3833
11
= (4000 + 3900 + 4000)/3 =396711 4,200 3967
12
=(3900 + 4000 + 4200)/3 = 403312 4,300 4033
13
= (4000 + 4200 + 4300)/3 = 416713 4,900 4167
14
= (4200 + 4300 + 4900) = 446714 5,300 44674.
Q
1
= 60
Q
2
= 70
I
1
= 1000
I
2
= 12002 By M. Iftikhar Mubbashir

Problems’ Solutions Project Evaluation
Q
1
–
Q
2
I
1
+
I
2
Income Elasticity of Demand
E
1
=

x
I
2
-
1

Q
2
–
Q
1
E
1
= Income Elasticity of Demand
Q
1
= Quantity demanded in the base year
Q
2
= Quantity demanded in the following year
I
1
= Income level in base year
I
2
= Income level in the following year 70 60 1000 + 1200
E
1
= x1200 1000 70 + 6022000
E
1
= = 0.846260005.
P
1
= Rs.40
P
2
= Rs.50
Q
1
= 1,00,000
Q
2
= 95,000
Q
2
–
Q
1
P
1
+
P
2
Price Elasticity of Demand =
E
p

=

x
P
2
–
P
1

Q
2
+
Q
1
P
1 ,
Q
1
= Price per unit and quantity demanded in the base year
P
2,
Q
2
= Price per unit and quantity demanded in the following year
E
p

= Price Elasticity of Demand95000 - 100000 40 + 50
E
p

= x50 - 40 95000 + 100000- 45
E
p

= = - 0.023119503 By M. Iftikhar Mubbashir

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