1. What forecasting ideas come to mind when you study John’s mean monthly sales values for the years of his data?
2. Suppose John draws a straight line freehand through his scatter diagram so that it “fits well” and then extends this line into the future, using points along the line as his monthly forecasts. How accurate do you think these forecasts will he? Use the standard deviation values John calculated in answering this question. Based on your analysis, would you encourage John to continue searching for a more accurate forecasting method? John has the latest version of Minitab on his computer. Do you think he should use the regression analysis feature of Minitab to calculate a least squares line? If he did, what X variable should he use to forecast monthly sales (Y)?
John Mosby, owner of several Mr. Tux rental stores, is interested in forecasting his monthly sales volume (see Case 1-1). As a first step, John collects monthly sales data for the years 1998 through 2005, as shown in Table 2-10.