Question

A textbook publishing company has compiled data on total annual sales of its business texts for the preceding nine years: Year Sales (000): - 1 37.60 2 42.40 3 49.30 4 53.40 5 55.20 6 57.70 7 60.80 8 69.20 9 74.70 a. Using a regression model, forecast textbook sales for each of the next five years using year as a factor. (Round your intermediate calculations to 3 decimal places and final answers to 2 decimal places.) 10 11 12 13 14 Year Forecast b. Compute +/- 2s control limits for the control chart for forecast errors using just data from the original nine periods. (Round your intermediate calculations to 4 decimal places and final answer to 2 decimal places.) Control limits are 0 + C. Suppose actual sales for the next five years turn out as follows: Year Sales (000): - 10 77.20 111 84.10 12 88.50 13 91.50 14 96.50 Is the forecast performing adequately?

Answer 1

To forecast textbook sales for each of the next five years using year as a factor, use the provided regression model. The forecasted textbook sales for the next five years are 78.00, 82.24, 86.48, 90.72, and 94.96 thousand sales.

Step-by-step explanation:

To forecast textbook sales for each of the next five years using year as a factor, we will use the regression model provided. The regression model is in the form of ŷ = b0 + b1x, where ŷ is the forecasted sales, b0 is the intercept, b1 is the slope, and x is the year.

Using the regression equation, we can calculate the forecasted sales for each year as follows:

1. For year 10: ŷ = 37.60 + 4.24(10) = 78.00 thousand sales.
2. For year 11: ŷ = 37.60 + 4.24(11) = 82.24 thousand sales.
3. For year 12: ŷ = 37.60 + 4.24(12) = 86.48 thousand sales.
4. For year 13: ŷ = 37.60 + 4.24(13) = 90.72 thousand sales.
5. For year 14: ŷ = 37.60 + 4.24(14) = 94.96 thousand sales.

Therefore, the forecasted textbook sales for each of the next five years are: 78.00, 82.24, 86.48, 90.72, and 94.96 thousand sales, respectively.