REGRESSION AND INVENTORIES Jasper Furnishings has $325 million in sales. The com

Question

REGRESSION AND INVENTORIES Jasper Furnishings has $325 million in sales. The company expects that its sales il increase 9% this year aspers uses a simple nea, regression to forecast e company's inventory level for a given level of projected sales. On the basis of recent history, the estimated relationship between inventories and sales (in millions of dollars) is as follows: Inventories = $25 + 0.165(Sales) a. Given the estimated sales forecast and the estimated relationship between inventories and sales, what are your forecasts of the company's year-end inventory level? Enter your answer in millions. For example, an answer of $25,000,000 should be entered as 25. Round your answer to two decimal places. million b. What are your forecasts of the company's year-end inventory turnover ratio? Round your answer to two decimal places.

Explanation / Answer

Answer 1 New sale= 325+9% of 325 New sale= 325+(.09*325) New sale= 354.25 Inventory=25+.165*new sale Inventory=25+.165*354.25 Inventory= 83.45125 Answer 2 Inventory turnover ratio=sale/Inventory Inventory turnover ratio=354.25/83.45 Inventory turnover= 4.24

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