relationship between funding and the rankings.

He has collected the following data, showing

the private endowments ($1,000,000s) and annual budgets ($1,000,000s) from state and private
sources for eight of Tech’s peer institutions plus Tech, and the ranking of each school:
Private Endowment Annual Budget
($1,000,000s) ($1,000,000s) Ranking
$ 2.5 $ 8.1 87
52.0 26.0 20
12.7 7.5 122
63.0 33.0 32
46.0 12.0 54
27.1 16.1 76
23.3 17.0 103
46.4 14.9 40
48.9 21.8 98
a. Using Excel, develop a linear regression model for the amount of the private endowment and
the ranking and forecast a ranking for a private endowment of $70 million. Does there appear
to be a strong relationship between the endowment and the ranking?
b. Using Excel, develop a multiple regression equation for all these data, including private endowment
and annual budget, and forecast a ranking for a private endowment of $70 million
and an annual budget of $40 million. How does this forecast compare with the forecast in
part (a)?
748 CHAPTER 15 FORECASTING
Case Problem
Forecasting at State University

D uring the past few years, the legislature has severely

reduced funding for State University. In reaction, the administration
at State has significantly raised tuition each
year for the past 5 years. Perceived as a bargain 5 years ago,
State is now considered one of the more expensive statesupported
universities. This has led some parents and students
to question the value of a State education, and
applications for admission have declined. Because a portion
of state educational funding is based on a formula tied to
enrollments, State has maintained its enrollment levels by
going deeper into its applicant pool and accepting lessqualified
students.
On top of these problems, a substantial increase in the
college-age population is expected in the next decade. Key
members of the state legislature have told the university
administration that State will be expected to absorb additional
students during the next decade. However, because
of the economic outlook and the budget situation, the university
should not expect any funding increases for additional
facilities, classrooms, dormitory rooms, or faculty.
The university already has a classroom deficit in excess of
25%, and class sizes are above the averages of the peer institutions.
The president of the university, Alva McMahon, established
several task forces consisting of faculty and administrators
to address these problems. These groups made
several wide-ranging general recommendations, including
the implementation of appropriate management practices
and more in-depth, focused planning.
Discuss in general terms how forecasting might be
used for university planning to address these specific problem
areas. Include in your discussion the types of forecasting
methods that might be used.