FILE While U.S. inventory levels remain low, there is a slight indication of an increase in the U.S. business inventory-to-sales ratio, due to higher sales (The Wall Street J o u rn a l, December 15, 2010). The accompanying table shows a portion of seasonally adjusted inventoryto-sales ratios from January 2008 to October 2010; the full data set can be found on the text website, labeled Inventory-to-Sales.

Year Month Inventory-to-Sales 2008 Jan 1.28 2008 Feb 1.30

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2010 Oct 1.27 SOURCE: U.S. Department o f Commerce.

a. Plot the above series. Which polynomial trend model do you think is most appropriate?

b. Verify your answer by formally comparing the linear, quadratic, and cubic trend models.

c. Make a forecast for the inventory-to-sales ratio for November and December of 2010.