Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tigers Ltd. sells tiger related paraphernalia and has been in operation since 2011. The company is trying to estimate its future sales. Its past sales

Tigers Ltd. sells tiger related paraphernalia and has been in operation since 2011. The company is trying to estimate its future sales. Its past sales were as follows:

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
5 7 9 10 11 15 16 23 22 21

The company hired a business consultant who performed a regression analysis to estimate its future sales which yielded the following equation:

Y = 2.1x + 2.5 (R^2 = 0.93)

The consultant indicated that replacing 11 into the equation should yield the next years sales estimate, 12 for the year thereafter and so on. The estimate for 2021 is R25.6 million.

One of the larger store managers indicated that they feel that it is overoptimistic as his store sales has been flat over the past two years.

Required: Briefly advise the management of Tigers Ltd. on the objective forecasting technique used and argue who is correct in this case (support your argument with facts from the question and theory).

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_2

Step: 3

blur-text-image_3

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

Mathematics Of Finance An Intuitive Introduction

Authors: Donald G. Saari

1st Edition

3030254429, 978-3030254421

More Books

Students also viewed these Accounting questions