Question

The following are sales revenues for a large utility company for years 11 through 1111 . Forecast revenue for years 1212 through 1515 . Because we are forecasting four years into the future, you will need to use linear regression as your forecasting method.

Year Revenue (millions)
1 $4,865.9
2 $5,067.4
3 $5,515.6
4 $5,728.8
5 $5,497.7
6 $5,197.7
7 $5,094.4
8 $5,108.8
9 $5,550.6
10 $5,738.9
11 $5,860.0

Answer 1

Using the linear regression model, the predicted sales are $250.12 thousand on day 60 and $324.52 thousand on day 90. The predictions are obtained by substituting the day numbers into the provided formula and adding the results to the y-intercept.

Step-by-step explanation:

To predict the sales on day 60 using the provided linear regression model ŷ = 101.32 + 2.48x, where x represents the day and ŷ the sales in thousands, we substitute x with 60. The calculation is as follows: ŷ = 101.32 + (2.48 × 60) = 101.32 + 148.8 = 250.12. Therefore, the predicted sales on day 60 are $250.12 thousand.

Similarly, to predict the sales on day 90, we substitute x with 90 in the model equation: ŷ = 101.32 + (2.48 × 90) = 101.32 + 223.2 = 324.52. Therefore, the predicted sales on day 90 are $324.52 thousand.

In both cases, the steps involved are to multiply the day number by the slope of the model, add the result to the y-intercept, and interpret the final value as thousands of dollars, which gives us the forecasted sales on the respective days.