Purchase Solution

Regression analysis and forecasting

Not what you're looking for?

Ask Custom Question

6. Finley Heaters Inc. is a mid-sized manufacturer of residential water heaters. Sales have grown during the last several years, and the company's production capacity needs to be increased. The company's management wonders if 'national housing starts' might be a good indicator of the company's sales:

National Housing Starts Annual Sales
Year (millions) (millions)
1 6.2 57
2 5.1 59
3 6.5 65
4 7.9 78
5 6.3 72
6 7.4 80
7 7 86

A) Develop a simple linear regression analysis between Finley Heaters' sales and national housing starts. Forecast Finley Heaters' sales for the next two years. The National Home Builders Association estimates that 'National housing starts' will be 7.1 million and 8.0 million for the next two years.

B) What percentage of variation in Finley Heaters' sales is explained by national housing starts?

C) Would you recommend that Finley Heaters management use the forecast from Part a to plan facility expansion? Why or why not? What could be done to improve the forecast?

see attached problem.

Purchase this Solution

Solution Summary

Uses regression analysis to forecast Finley Heaters' sales using national housing starts as the independent variable.

Purchase this Solution

Free BrainMass Quizzes
Measures of Central Tendency

Tests knowledge of the three main measures of central tendency, including some simple calculation questions.

Terms and Definitions for Statistics

This quiz covers basic terms and definitions of statistics.

Measures of Central Tendency

This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.

Know Your Statistical Concepts

Each question is a choice-summary multiple choice question that presents you with a statistical concept and then 4 numbered statements. You must decide which (if any) of the numbered statements is/are true as they relate to the statistical concept.