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Why would a straight line model be an efficient forecasting tool and how does regression aid...

Why would a straight line model be an efficient forecasting tool and how does regression aid in such modeling? Provide three examples.

Math   Statistics-And-Probability   
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Answer #1

linear regression only looks at linear relationships between dependent and independent variables. That is, it assumes there is a straight-line relationship between them. The regression method of forecasting means studying the relationships between data points, which can help you to:

  • Predict sales in the near and long term.
  • Understand inventory levels.
  • Understand supply and demand.
  • Review and understand how different variables impact all of these things.

The regression method of forecasting involves examining the relationship between two different variables, known as the dependent and independent variables.

Examples:

Home price prediction using independent variable number of rooms, area,number of bedrooms like

Suppose that you want to forecast future sales for your firm and you've noticed that sales rise or fall, depending on whether the gross domestic product goes up or down.

Yeild id response variable and independent variable furtiliser ,soil quality,water rain..

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