Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Finley Heaters Inc. is a mid sized manufacturer of residential water heaters. Sales have grown during the last several years, and the companys production capacity

Finley Heaters Inc. is a mid sized manufacturer of residential water heaters. Sales have grown during the last several years, and the company’s production capacity needs to be increased. The company’s management wonders if national housing starts might be a good indicator of the company’s sales.

Year

National Housing Starts (millions)

Finley Heaters’ Annual Sales (millions of dollars)

1

6.2

57

2

5.1

59

3

6.5

65

4

7.9

78

5

6.3

72

6

7.4

80

7

7.0

86

Develop a simple linear regression analysis between Finley Heaters’ sales and national housing starts. Forecast Finley Heaters’ sales for the next two years. The National Home Builders Association estimates that national housing starts will be 7.1 million and 8.0 million for the next two years.

What percentage of variation in Finley Heaters’ sales is explained by national housing starts?

Would you recommend that Finley Heaters management use forecast from Part a to plan facility expansion? Why or why not? What could be done to improve the forecast?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Asset Management A Systematic Approach To Factor Investing

Authors: Andrew Ang

1st Edition

0199959323, 978-0199959327

More Books

Students also viewed these General Management questions

Question

What is an appropriate placement of controversial questions?

Answered: 1 week ago