Demand for stereo headphones and MP3 players for joggers has caused Nina Industr

Question

Demand for stereo headphones and MP3 players for joggers has caused Nina Industries to grow almost 50 percent over the past year. The number of joggers continues to expand, so Nina expects demand for headsets to also expand, because, as yet, no safety laws have been passed to prevent joggers from wearing them. Demand for the players for last year was as folows MONTH January February March April May DEMAND (UNITS) 4.130 4.230 3.930 4.330 4.930 4.030 5.230 4,830 5.330 5.030 .230 5,030 July Augus: September November Dacembar a. Using linear regression analysis, what would you estimate demand to be for each month next year? Using a spreadsheet, follow the general format in Exhibit 3.7. (Do not round intermediate calculations. Round your answers to 2 decimal place3.) Month March Apri May July August October b. To be reasonably confident of meeting demand, Nina decides to use 2 standard erors of estimate for safety. How many additional units should be held to meet this level of confidence7 (Do not round intermediate calculations. Round your answer to the nearest whole number.) Additional units

Explanation / Answer

a. We are provided with the following data:

In excel go to "data" then "data analysis" and select  "regression" The y values will be the actual demand and the x values will be the number of the month.

The excel output is provided below:

Using the output we know the regression equation is: y = a+bx or y = 3696.666667 + (192.3076923*x)

In the next year January will become month 13, February will become month 14 and so on.

Thus forecast for next year's January will be = 3696.66667 +(192.3076923*13) = 6196.67. Similarly forecasts for all the months are provided below:

b. From the excel output provided in "a" we can see that standard error = 269.8527614

Thus additional units to be held = 2*269.8527614

= 539.7055

This will be rounded off to the next nearset whole number i.e. 540

Thus additional units = 540

Month Month no. Actual demand January 1 4,130.00 February 2 4,230.00 March 3 3,930.00 April 4 4,330.00 May 5 4,930.00 June 6 4,630.00 July 7 5,230.00 August 8 4,830.00 September 9 5,330.00 October 10 5,630.00 November 11 6,230.00 December 12 5,930.00

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