PPT Slide
Example of Regression Analysis
Constant ratio overestimates Inventory requirement: $162(1.25) = $202.5.
Inv.
Sales
(000)
1.28
1.6
2.0
2.5
Reg.
line
Constant
ratio forecast
For a Well-Managed Co.
Year
Sales
Inv.
1994
$1,280
$118
1995
1,600
138
1996
2,000
162
1997
2,500E
192E
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