1. Comment on John's belief that his monthly sales are highly seasonal and therefore lead to a "low" r2 value.
2. What is your opinion regarding the adequacy of John's forecasting method?
3. How do John's data violate one of the assumptions of regression analysis?
John Mosby has heard that regression analysis is often used to forecast time series variables, and since he has a personal computer with a regression software package, he decides to give it a try. The monthly sales volumes for Mr. Tux for the years 1998 through 2005 are the dependent variable. As a first try, he decides to use the period number as the predictor, or X, variable.