The Calculator Company (TCC) needs to estimate its sales revenue for next year for its most popular line of calculator. The most recent 12 years of revenue data for the company’s popular line of calculators is provided below. In addition, the total industry sales revenue for the comparable calculators is also provided.

Year	TCC Sales Revenue (in millions)	Industry Sales Revenue (in billions)	Year	TCC Sales Revenue (in millions)	Industry Sales Revenue (in billions)
1	$46.7	$6.1	7	$101.2	$16.0
2	59.3	11.4	8	100.8	16.0
3	74.2	12.8	9	104.5	16.5
4	77.9	10.5	10	107.1	17.5
5	85.1	15.3	11	109.3	19.5
6	98.0	14.4	12	108.3	18.5

Your work must reflect the correct independent and dependent variables based on the problem statements. This is part of the solution that is required.

a) It is believed that TCC’s sales revenue changes with time. Develop a linear regression model that can be used to predict TCC’s sales revenue for year 13. Provide the correct independent and dependent variables and provide the linear regression relationship in terms of these independent and dependent variables. What is the forecast for year 13 and based on the strength of the relationship would you use this forecast?

b) TCC believes that its sales revenue simply changes as the Industry Sales change. Develop a linear regression model that can be used to predict TCC’s sales revenue for year 13 if the Industry Sales Revenue is projected to be $19.2 billion. Provide the correct independent and dependent variables and provide the linear regression relationship in terms of these independent and dependent variables. What is the forecast for year 13 for TCC’s sales revenue based on the projected Industry Sales Revenue? Based on the strength of the relationship would you use this forecast?

c) During the 12 years analyzed in parts a) and b), the economy was strong and calculator sales were continuing to increase each year. However, the economists are now predicting that there will be a sharp down turn in the economy. As a result, industry sales are only projected to be $14.0 billion. Predict the sales revenue for TCC based on this projection of the industry sales for next year. What cautions would you recommend about using this linear regression relationship for predicting a TCC’s sales revenue considering this outlook for the economy?

Answer rating: 100% (QA)

Solution Calculations are as shown below 1 A 2 Year 3 4 5 6 7 8 9 10 11 12 ... View the full answer