Crossland Construction’s design/build department allows theirclients (owners) to select the design and construction team basedon their combined experience and track-record. Design/build firmstypically have a cash flow problem since they tend to be paid inlump sums when projects are completed or hit milestones. However,their expenses, such as payroll, must be paid regularly. So, suchfirms need bank lines of credit to finance their initial costs, butin the past year, lines of credit were difficult to negotiate. Thedata file Crossland Construction contains month-end cash balancesfor the past 16 months.

a) Plot the data as a time-series graph. Fit a linear line to thedata. Discuss what the graph implies concerning the relationshipbetween cash balance and the time variable, month.
b) Fit a linear trend model to the data. Compute the coefficient ofdetermination. Discuss the appropriateness of the linear trendmodel. What are the strengths and weaknesses of the model?
c) Referring to part b), compute the MAD and MSE for the 16 datapoints.

d) Plot the data as a time-series graph. Fit a polynomial line tothe data. Discuss what the graph implies concerning therelationship between cash balance and the time variable,month.
e) Use the t2 transformation approach and recompute the linearmodel using the transformed time variable. Discuss whether thismodel appears to provide a better fit than did the model withoutthe transformation. Compare the coefficients of determination forthe two models. Which model seems to be superior, using thecoefficient of determination as the criterion?
f) Referring to part e), compute the MAD and MSE for the 16 datavalues. Discuss how these compare to those that were computed inpart c), prior to transformation. Do the measures of fit (R2, MSE,MAD) agree on the best model to use for forecasting purposes?

g) Use the linear trend model (without transformation) for thefirst 15 months and provide a cash balance forecast for month 16.Then use the transformation model for the first 15 months andprovide a cash balance forecast for month 16. Now, compare theaccuracy of the forecasts with and without the transformation.Which of the two forecast models would you prefer? Explain youranswer.

Month	Cash Balance
1	75
2	70
3	77
4	89
5	80
6	92
7	91
8	102
9	106
10	130
11	155
12	160
13	180
14	199
15	240
16	305