27 Mark Price, the new productions manager for Speakers and Company, needs to find out which variable most affects the demand for their line of stereo speakers. He is uncertain whether the unit price of the product or the effects of increased marketing are the main drivers in sales and wants to use regression analysis to figure out which factor drives more demand for their partic- ular market. Pertinent information was collected by an extensive marketing project that lasted over the past 10 years and was reduced to the data that follow:

a. Perform a regression analysis based on these data using Excel. Answer the following ques- tions based on your results.

b. Which variable, price or advertising, has a larger effect on sales and how do you know?

c. Predict average yearly speaker sales for Speakers and Company based on the regression results if the price was $300 per unit and the amount spent on advertising (in thousands) was $900.

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SALES/UNIT ADVERTISING YEAR (THOUSANDS) PRICE/UNIT ($ooo) 1994 400 280 600 1995 700 215 835 1996 900 211 1,100 1997 1,300 210 1,400 1998 1,150 215 1,200 1999 1,200 200 1,300 2000 900 225 900 2001 1,100 207 1,100 2002 980 220 700 2003 1234 211 900 2004 925 227 700 2005 800 245 690