1) The sales fro sunflowers a chain of apparel stores for women, have increased
ID: 3296901 • Letter: 1
Question
1) The sales fro sunflowers a chain of apparel stores for women, have increased during the past 12 years as the chain expanded the number of stores open. Until now, sunflowers senior managers selected sites based on subjective factors such as the availability of a good lease or the perception that a location seemed ideal for an apparel store. As the new director of planning, you need to develop a systematic approach to selecting new sites taht will allow Sunflowers to make better informed decisions for opening additional stores. This plan must be able to forecast annual sales for all potential stores under consideration. You believe that that size of the store significantly contributes to the success of a store and the size of the store significantly contributes to the success of a store and you want to use the relationship in the decision making process.
How can you use statistics so that you can forecast the annual sales of a proposed store based on the size of that store?
Explanation / Answer
We would first need to collect past data of the sales from every store along with the size of that store. We would then be using Regression ananlysis to understand if there is really any relationship between the Store size and the sales. The regression model will also give us coefficients to be used to forecast the annual sales based on the size of that store. The linear relation would look like given below.
Y = a0 + a1*X, Where Y would be the sales and X would be the size of the store.
If the scatter plot of the data does not look like a linear relation to us then we can also use Quadratic or Cubic model.
Example of Quadratic model would be,
Y = a0 + a1*X + a2*X2
Regression analysis also has the ability to calculate the amount of variation that can be accounted by the model.
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