(Forecasting inventories) 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 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: E 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 2019, when firm sales are projected to reach $30 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. (Click on the following icon in order to copy its contents into a spreadsheet.) YEAR 2014 2015 2016 2017 2018 SALES ($000) $14,000 17,000 16,500 19,000 24,000 INVENTORY ($000) $1,070 1,110 1,100 1,130 1,190 % OF SALES 7.64% 6.53% 6.67% 5.95% 4.96% Average 6.35% a. Findlay's sales and inventory balances for the past 5 years are plotted in the figure below. Inventory ($000) 1500- 1400- 1300- 1200- 1100- Inventory ($000) 1500 1400- 1300- 1200- 1100- 1000+ 10000 15000 20000 25000 30000 35000 40000 Which of the following best defines the relationship between these two variables? (Select the best choice below.) A. A hyperbolic function. B. A parabolic function. C. A linear function. D. A logarithmic cylinder function. E. An exponential function. b. Use the average percentage of sales for the past 5 years to make the prediction. What are the firm's projected inventories for 2019 when the sales are projected to reach $30 million? (Round to the nearest dollar.) Use the most recent percentage of sales to make the prediction. What are the firm's projected inventories for 2019 when the sales are projected to reach $30 million? (Round to the nearest dollar.) Use your evaluation of the true relationship between the sales and inventories from part a to make the prediction. What are the firm's projected inventories for 2019 when the sales are projected to reach $30 million? $ (Round to the nearest dollar.) (Forecasting inventories) 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 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: E 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 2019, when firm sales are projected to reach $30 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. (Click on the following icon in order to copy its contents into a spreadsheet.) YEAR 2014 2015 2016 2017 2018 SALES ($000) $14,000 17,000 16,500 19,000 24,000 INVENTORY ($000) $1,070 1,110 1,100 1,130 1,190 % OF SALES 7.64% 6.53% 6.67% 5.95% 4.96% Average 6.35% a. Findlay's sales and inventory balances for the past 5 years are plotted in the figure below. Inventory ($000) 1500- 1400- 1300- 1200- 1100- Inventory ($000) 1500 1400- 1300- 1200- 1100- 1000+ 10000 15000 20000 25000 30000 35000 40000 Which of the following best defines the relationship between these two variables? (Select the best choice below.) A. A hyperbolic function. B. A parabolic function. C. A linear function. D. A logarithmic cylinder function. E. An exponential function. b. Use the average percentage of sales for the past 5 years to make the prediction. What are the firm's projected inventories for 2019 when the sales are projected to reach $30 million? (Round to the nearest dollar.) Use the most recent percentage of sales to make the prediction. What are the firm's projected inventories for 2019 when the sales are projected to reach $30 million? (Round to the nearest dollar.) Use your evaluation of the true relationship between the sales and inventories from part a to make the prediction. What are the firm's projected inventories for 2019 when the sales are projected to reach $30 million? $ (Round to the nearest dollar.)
