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# Sales Equation, Correlation Coefficient and Coefficient of Determination

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Problem 24
Consider the following annual sales data for 1996-2003, use the linear regression method and
a. determine the estimated sales equation.
b. determine the correlation coefficient and the coefficient of determination.

Year .....Sales
1996 ........2
1997 ........4
1998 ........10
1999 ........8
2000 ........14
2001 ........18
2002 ........17
2003 ........20

#### Solution Summary

Excel is used to find a Sales Equation, Correlation Coefficient and Coefficient of Determination.

\$2.19

## Correlation Coefficient and Determination- Schering-Plough Corporation

Listed below are the net sales for Schering-Plough Corporation (a pharmaceutical company) and its subsidiaries for the six years from 1997 to 2002.

The net sales are in millions of dollars.

Year Net Sales
1997 \$ 6,714
1998 7,991
1999 9,075
2000 9,775
2001 9,762
2002 10,180

a. Determine the correlation coefficient and the coefficient of determination. Interpret the results.
b. Determine the least squares equation. According to this information, what are the estimated sales for 2005 and 2010?

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