Multiple linear regression analysis of New York Times newspaper delivery times

¶ … multiple liner regression to determine the time taken to dispatch daily subscription newspapers from the New York Times Printing Plant to several offices and homes in New York City and its neighborhood. The newspaper delivery routes are to be the shortest and most efficient in terms of conserving fuel that would otherwise be wasted on traffic jams. The Logistics Manager suggested that the variables that are most crucial are the distance to be traveled by the delivery vans and total number of newspapers to be delivered in any particular area. The logistics Manager pooled observations from 25 offices and homes on the average newspaper delivery times. This data was then used to model the econometric model and an analysis carried out.

This paper concludes with recommendations to the New York Times CTO on the most important changes on the logistics department of the firm. This paper prescribes the best possible solution that would yield an increase in the company's ROI.

Introduction

Econometrics is the development and the application of quantitative together with statistical techniques in the study of economics. It combines both the theories of economics and statistics in the analysis and the analysis of relationships that exists in economics.

Econometrics is divided into two major branches. The first one, theoretical econometrics, deals with questions regarding the properties of statistical tests and their corresponding estimators. The second branch of econometrics that is referred to as applied econometrics deals with the application of econometric principles for the purpose of assessing economic theories.

The observational nature of econometric data makes it very hard to predict the exact case scenarios as one would do in the case of a controlled experiment. It is of paramount importance to present the observations on the basis of non-complex behavioral correlation that are technology or preference based. This solves the inherent problem of complex equilibrium conditions that model different economic conditions.

Economists therefore have developed a systematic approach for making credible conclusions without the need of control experiments.

The major reasons as to why econometrics is applied are two. The first one being that it is can be utilized in the process of giving empirical data that is applicable in the field of economic theory. It can also be used to perform or rather to subject theories of economics to test as to whether they are true or false.

Hypothesis Development

The hypothesis used in this study was drawn after consideration of all the important factors that affected the rate at which the newspapers got delivered to their predetermined destinations. All determinants were taken into account.

The dependent variable in this case was considered to be time while the independent variable was the number of newspapers delivered. The empirical relationship that was derived was of the nature:

Y=a+b*X+C

Where

The Y variable denoted Time while the X and C. denoted the distance traveled.

Data Description

The data collected included the time of delivery of the newspapers and the number of newspapers delivered. It was also important to consider the distance traveled in the delivery period of the particular newspapers. Several other micro determinants such as the demographics of the delivery zones were also noted but were not used in the hypothesis formulation. The table below shows the details of the data that was recorded during the research period.

Time

Newspapers

Route Distance

Time

Newspapers

Route Distance

18,69

7

16,8

8

8,2

6

24

9

12,05

4

28

12

16,68

5

15,43

6

12,75

6

19

6

18,91

8

9,6

3

36

8

3

67

17,63

7

10

39

52,1

27

21,5

6

18,77

9

40,23

17

19,9

9

21

10

11,88

4

13,5

5

The data was then tested against the formulated macroeconomic empirical formula that modeled the delivery process.

Econometric Methodology

The following table summarizes the steps followed in collecting the data needed in the study and the way they were analyzed and presented.

Regression

Multiple regressions were conducted using various variables that affect the distribution of the newspaper across the town and its neighborhood. The dependent variable was time in this case while the independent variables were the number of newspapers and the distance traveled in the process of delivery. The 3-Dimensional plot and calculation of regression was done and the result was as follows:

Conclusion

The econometric analysis of the newspaper delivery explored the possible ways of improving the time taken and energy (gas) spent in the process. It was found that a simple change in the routes could results in a 12% increase in the companies ROI. The other determinants of which were the demographics of the City and its neighborhoods.

The complex road network in the Manhattan is major logistical nightmare. This study revealed that the problem of traffic jam also led to loss of sale as most clients could not entertain the idea of late delivery. Therefore, it was shown by the study that better and shorter routes would be devised for the purpose of the morning newspaper delivery.

The recommendations from the econometric analysis were that the company should purchase smaller vans that would easily access narrow allay in order to increase the newspaper delivery penetration area. The other recommendation involved the elimination of the delivery note signing process.

It is however worth mentioning that the advent of the internet technology has also affected the sale of printed newspapers. This is mainly fuelled by the fact that news through the internet is cheaper to access and is mainly free. It also became clear that the sales of newspapers in the New York area were time specific. This is because most newspapers were accepted in the earlier times of the morning and rejected in the later hours of the morning period.