Question

Question 2 (1 point)

You work for a company in the marketing department. Your manager has tasked you with forecasting sales by month for the next year. You notice that over the past 12 months sales have consistently gone up in a linear fashion, so you decide to run a regression the company's sales history. You find that the regression equation for the data is (sales) = 71.086*(time) + 147.189. Assuming sales follow the same trend this year to next, what sales quantity would you expect to see in 8 months?

Question 2 options:

1)	We do not know the observations in the data set, so we cannot answer that question.

2)

715.88

3)

1248.6

4)

-1.96

5)

568.69

Answer 1

We use regression to find out the value of the dependent variable for a given value of the independent variable. Now the interpretation of a simple linear regression equation of the form Y = a + b X is that for unit value of X the value of Y will increase b times. When the value of ☓ is 0 the value of dependent variable Y will be a. In the given problem we have sales as depending variable whereas time is the independent variable. Now for time = 8 months we have sales as

71.086 * 8 + 147.189 = 568.688 + 147.189 = 715.88

Hence the ans is 2) 715.88