Question

The top management of Computer Products Corporation (CPC) in San Jose is now going through the prelimanary steps of its annual planning process to develop an operating plan for next year. Jane Billingsley is one of the staff analysts charged with the responsibilty of estimating the level of revenues for next year. Her approach is to develop individual product line forecasts and then combine the product line forecasts into an aggregate sales forecast for CPC. She is now in the process of examining the most recent six years of sales data for CPC's line of XT Personal computers:

Year	sales revenue (millions of dollars)	Year	Sales Revenue (millions of dollars)
1	1.4	4	26.8
2	6.9	5	34.9
3	16.5	6	39.1

a. Assuming that the sales data above are representative of sales expected next year, use time series regresion analysis to forecast next years (year 7's) sales revenue for the line of XT Personal computers.

b. Determine the correlation coefficient for the data and interpret its meaning.

c. Find the coefficient of determination for the data and interpret its meaning.

Answer 1