Planning and Forecasting: Homework 1. Meijer had $300 million in sales last year. The company expects that its sales will increase 12 percent during the upcoming year. Meijer's CFO uses a simple linear regression to forecast the company's average inventory level for a given level of projected sales. On the basis of recent history, the estimated relationship between inventories and sales is provided below. Both "inventories" and "sales" are in millions of dollars (i.e., sales of $1,000,000 is put in the equation as 1). Inventories = $2.5 + 0.0125(Sales) a. What is the forecasted average inventory level for next year? b. Currently the warehouse can accommodate $9.3 million in inventory. At what sales level will the warehouse reach maximum capacity? meijer