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Data Forecasting Using Simple Linear Regression Model

Please state the regression model, the Sy.x, r2, and t*. Tell me if this regression model is reliable (or not) and why you believe that. If the model is reliable, make forecasts for years 11-15 and show me those forecasts.

Setup: We make a control valve whose sales have been growing. The marketing manager believes that this is dependent on the year since the valve's introduction to the market, and has provided you with the following data:

Sales Year
(in thousands of units)

1000 1
1300 2
1800 3
2000 4
2000 5
2000 6
2200 7
2600 8
2900 9
3200 10

Run a formal analysis and report the results to the marketing manager as required in the first paragraph.

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Solution Preview

Using Excel:
The regression model is Y = 215.7x +913.3, where Y is the sales while X is the year.
The computed r-squared is 0.941 (being very close to 1), which means that the regression model is reliable.

Using SPSS:
SPSS computation will give you the same result.

Note: Using the ...

Solution Summary

The solution computes and forecasts using a simple linear regression model.