Prediction vs. Forecast

Prediction. "In simple regression analysis, a prediction of y can be made by substituting a value of x into the regression equation and solving for y. In an airline cost example, the number of passengers is x = 73 may predict the cost, y, of the airline flight" (y= 1.570+0.0407*(73)=4.541) (Black, 2017, p. 453).

Forecast. "Business researchers often use historical data with measures taken during time intervals to forecast what might happen in the future. A type of data that often lends itself well to this analysis is time-series data" (Black, 2017, p. 457).

Scenario:ABC Products is a single-product company with a great first four sales years. However, the last eight has been instead a bumpy road. Acme is also a small company of business graduate entrepreneurs that aspire to have ABC Products' advertising business. Acme has put forth a proposal that shows investing in advertising increases the average sales per unit.

Proposal: In 2019, ABC spent $690 and had $800 average sales per unit sold. In 2020, Acme's proposes that ABC allocate $1,600 to advertising.

A. Write a regression equation in the form, y =Bo+B₁x

Where y is the Average Sales per Unit,Bois the y-intercept,B₁is the slope, and x is the Advertising $.

y =

B. ABC Products will spend $1,600 on advertising in 2020. What are their predicted average sales per unit?

C. With the Average Price per Unit at $217, what are their predicted sales for 2020?