Interpreting regression results, matching time periods. Brickman Apparel produces equipment for the extreme-sports market. It has four peak periods, each lasting two months, for manufacturing the merchandise suited for spring, summer, fall, and winter. In the off-peak periods, Brickman schedules equipment maintenance and runs advertising to generate demand for its upcoming seasonal merchandise. Brickman’s controller, Sascha Green, wants to understand the drivers of equipment maintenance costs and the effect of advertising expenditures on sales. A regression analysis of two years of monthly data yields the following relationships:

Maintenance costs = $21,000 – ($2.20 per machine-hour × Number of machine-hours)

Sales revenue = $310,000 – ($1.80 × advertising expenditure)

Upon examining the results, Green comments, “So, all I have to do to reduce maintenance costs is run my machines longer?! And, clearly our advertising function is broken: The more we spend on advertising, the lower our sales revenue.”

1. Explain why Green made this comment.

2. Suggest a more economically plausible relationship between monthly maintenance costs and monthly machine-hours. Justify your choice.

3. Suggest a more economically plausible relationship between monthly sales and advertising expenditures. Justify your choice.