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Demand Analysis Trends and Forecasting

A linear trend equation for sales of the form Qt = a + bt was estimated using annual sales data for the period 2000 - 2007 (i.e., t = 2000, 2001, ..., 2007). The results of the regression are as follows:

DEPENDENT QT R Square F Ratio P-Value on F
VARIABLE:

OBSERVATIONS: 8 0.7034 14.23 0.0093
PARAMETER STANDARD
VARIABLE ESTIMATE ERROR T-RATIO P-VALUE
INTERCEPT -23,024,200 8,122,205 -2.83 0.0298
T 12,045 6075 1.98 0.0947

a. Do the estimates indicate a trend in sales? If so, what is the trend in units per year? Explain.
b. What would you forecast sales to be in the year 2008? Explain.
c. What would you forecast sales to be in the year 2010? Explain.

Solution Preview

We know that the demand is in the form Q = a + bt.

The estimate of a (the intercept) is -23,024,200. This parameter is moderately significant as its p-value is less than 0.05 but greater than ...

Solution Summary

The solution discusses the demand analysis trends and forecasting.

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