EMAT 6680 - Fall 2004

Assignment 12

The 'Power' of Excel

By Keri Hurney

Using Excel spreadsheets and graphics to help forecast the price of the first class letter postage stamp (currently 37 cents) in the U.S.

The data set includes the price of the 1st class letter postage stamp in the United States for the years 1919 through 2002. When will we have to pay \$1.00 for a 1st class letter postage stamp? How about 64 cents? Also, can this data set help us predict when the next 3 cent increase of the postage stamp will be?

See a diagram of the data set below:

The following is an XY plot of the postage rate data:

What does this data represent? Does this curve resemble a power function or perhaps an exponential function? Using Excel to graph the given data has advantages. Excel chart wizard will actually figure out a 'best fit equation' to for the data given.

The following function (equation) was calculated by excel for this 1st class letter postage rate data.

We can use this power function equation to forecast postage stamp prices and answer the questions:

When will the 1st class letter postage stamp = \$1.00? 64 cents? have the next 3 cent increase?

To help answer these questions, see this power function graphed in Excel below.

The forecasted data starting at the year 2002 and projecting into the future till the postage stamp cost reaches \$1.00 appears in the diagram below:

Using the Excel power function to forecast the cost of a 1st class letter postage stamp, we are able to project the following:

In the year 2017 - 1st class postage stamp will cost around 64 cents.

In the year 2029 - 1st class postage stamp will cost \$1.00 or more.

In the year 2005 - 1st class postage stamp should cost 40 cents

(the next 3 cent increase)