Question

What type of sales forecasting technique is a linear trend extrapolation?

1) Qualitative forecasting technique
2) Quantitative forecasting technique
3) Time series forecasting technique
4) Causal forecasting technique

Answer 1

A linear trend extrapolation is a quantitative forecasting technique used to predict future outcomes by fitting a linear equation to historical data. Using the given model, the predicted sales on day 60 would be $250.12 thousand, and on day 90 would be $324.52 thousand. The correct option is 2.

Step-by-step explanation:

A linear trend extrapolation is a quantitative forecasting technique. It involves using historical data to predict future outcomes by fitting a linear equation to the data points. In the case of the electronics retailer, the linear equation given is ŷ = 101.32 + 2.48x, where ŷ represents the sales in thousands of dollars and x is the day.

To predict the sales on day 60, we substitute x with 60 in the equation and calculate ŷ, which would be 101.32 + (2.48 × 60) = 101.32 + 148.8 = 250.12 thousand dollars. Similarly, for day 90, it would be 101.32 + (2.48 × 90) = 101.32 + 223.2 = 324.52 thousand dollars.