Padini Concept Stores is a chain of clothing stores that caters to young adults. It publishes a quarterly catalog and operates a website that features attractively attired young males and females working adults. The website is expensive to maintain and company executives are not sure if the number of hits at the site relate to sales; that is, people may be looking at the site for pictures rather than as potential customers. The webmaster has accumulated the following data for hits per month and orders placed at the website for the past 20 months.

i) Develop a linear regression model for these data and indicate if there appears to be a strong relationship between website hits and orders. You need to calculate the slope (a), intercept (b), coefficient of correlation (r), coefficient of determination (r2) and show the scatter plot of the actual data versus the linear regression line

ii) What would be the forecast for orders with 35,000 hits per month?

b) Discuss the importance of accurate forecasts in supply chain management. 

Hits Orders Hits Orders (1,000s) (1,000s) (1,000s) (1,000s) 36.7 9.1 48.3 9.3 38.5 6.2 43.5 6.2 35.1 9.0 52.6 10.0 24.5 5.7 54.2 8.7 27.9 6.2 38.5 5.1 31.4 4.8 28.9 4.4 29.4 5.1 26.4 5.2 25.5 6.0 39.4 6.0 52.3 10.8 44.3 8.4 35.2 7.5 46.3 7.9