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:

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 $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.

Data table (Click on the following icon in order to copy its contents into a spreadsheet.) a. Findiay's sales and inventory balances for the past 5 years are plotted in the figure below