Bus308 Statistics for Managers - Final Paper - 1062 Words

Gas Prices Nathaniel Peters BUS 308: Statistics for Managers Instructor: Ali Choudhry August 8, 2011 Gas Prices Delivery service is a way of life. Each day, people get packages sent to them by way of this service. But few people think of the costs the delivery company has to deal with. One of the main operating costs that we as a delivery company have is gasoline. We use gasoline daily in massive quantities. The cost of gas affects American’s daily, and people can be heard complaining about the high prices. What about delivery companies? In this paper, we will be discussing the effect of rising gas prices on our company throughout the next ten years. Gas prices change daily, and throughout the year it is amazing to look at the†¦show more content†¦In 2010, the average gas price was about 2.8, which is just a little bit below the linear regression line. Some years it is higher than the line and some lower. But the line is the middle showing where the prices should be. Residuals occur when what the price should be isn’t exactly what it should be. We will have re siduals throughout the years, but we can make assumptions on what we as a company will have to pay in gasoline by looking at the linear regression line. With this information, we can guesstimate what the cost of gasoline will be in 2015, 2020, or even 2050. I believe that we can accurately predict gas prices based on the values given. It is important to remember, however, that these are simply predictions and not fact. We must be prepared for extenuating circumstances that would significantly alter the gasoline prices. Anything that would cause us to lose an oil supply would affect the supply and demand ratio, thereby causing the prices to increase, as the supply cannot fill the demand. Alternately if we were to acquire additional oil supplies we would increase the supply while the demand would stay the same, thereby decreasing prices. Delivery service is an important business, and could not be done without gasoline to put in the trucks that deliver the merchandise. It is important as we plan for the future that we are aware of our most basic and costly operating expense. We must be prepared, that we will be able to budget effectively. When doing our