Findlay Instruments produces a complete line of medical instruments used by plastic surgeons and has experienced rapid growth over the past 5 years. In an effort to make more accurate predictions of its financing requirements, Findlay is currently attempting to construct a financial-planning model based on the percent of sales forecasting method. However, the firm's chief financial analyst (Sarah Macias) is concerned that the projections for inventories will be seriously in error. She recognizes that the firm has begun to accrue substantial economies of scale in its inventory investment and has documented this fact in the following data and calculations:

a. Plot Findlay's sales and inventories for the past 5 years. What is the relationship between these two variables?

b. Estimate firm inventories for 2016, when firm sales are projected to reach $40 million. Use the average percentage of sales for the past 5 years, the most recent percentage of sales, and your evaluation of the true relationship between the sales and inventories from part (a) to make three predictions.

a. Findlay's sales and inventory balances for the past 5 years are plotted in the figure below. Inventory ($000) 15007 1400 E 1300- 1200- . 1100 1000+ Inc ned 1000- 10000 15000 40000 20000 25000 30000 35000 Sales ($000) Which of the following best defines the relationship between these two variables? (Select the best choice below.) O A. A logarithmic cylinder function. B. A linear function. C. An exponential function. OD. A hyperbolic function. O E. A parabolic function. evalua - Data table YEAR SALES ($000) INVENTORY ($000) % OF SALES 2011 $15,000 $1,150 7.67% 2012 18,000 1,180 6.56% 2013 17,500 1,175 6.71% 2014 20,000 1,200 6.00% 2015 25,000 1,250 5.00% Average 6.39% (Click on the icon located on the top-right corner of the data table above in order to copy its contents into a spreadsheet.) Print Done a. Findlay's sales and inventory balances for the past 5 years are plotted in the figure below. Inventory ($000) 15007 1400 E 1300- 1200- . 1100 1000+ Inc ned 1000- 10000 15000 40000 20000 25000 30000 35000 Sales ($000) Which of the following best defines the relationship between these two variables? (Select the best choice below.) O A. A logarithmic cylinder function. B. A linear function. C. An exponential function. OD. A hyperbolic function. O E. A parabolic function. evalua - Data table YEAR SALES ($000) INVENTORY ($000) % OF SALES 2011 $15,000 $1,150 7.67% 2012 18,000 1,180 6.56% 2013 17,500 1,175 6.71% 2014 20,000 1,200 6.00% 2015 25,000 1,250 5.00% Average 6.39% (Click on the icon located on the top-right corner of the data table above in order to copy its contents into a spreadsheet.) Print Done