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March 21, 2013

Statistical Analysis on least square equation and plot net sales and trend line





1.                  Listed below is the net sales in $ million for home Depot, Inc. and its subsidiaries from 1997 to 2006.
Table 1: Net sales of different years
Year
Net Sales ($)
Year
Net Sales ($)
1997
50,600
2002
 156,700
1998
67,300
2003
201,400
1999
80,800
2004
227,300
2000
98,100
2005
256,300
2001
124,400
2006
280,900
Note: Add last three digits of your ID with Net Sales

i)                    Determine the least square equation. On the basis of this information, what are the estimated sales for 2010?

ii)                  Plot Net Sales and Trend Line


 

 

Year
Net Sale($)
Time(t)
Net Sales + ID(047)
Y=a+bt
1997
 $    50,600.00
1
 $                   50,647.00
 $    32,847.00
1998
 $    67,300.00
2
 $                   67,347.00
 $    59,940.00
1999
 $    80,800.00
3
 $                   80,847.00
 $    87,033.00
2000
 $    98,100.00
4
 $                   98,147.00
 $  114,126.00
2001
 $  124,400.00
5
 $                124,447.00
 $  141,219.00
2002
 $  156,700.00
6
 $                156,747.00
 $  168,312.00
2003
 $  201,400.00
7
 $                201,447.00
 $  195,405.00
2004
 $  227,300.00
8
 $                227,347.00
 $  222,498.00
2005
 $  256,300.00
9
 $                256,347.00
 $  249,591.00
2006
 $  280,900.00
10
 $                280,947.00
 $  276,684.00
 

I)  The least square equation for Net sales ($) is, y’=a +bt=27039t + 5413
The value 5413 is the estimated value of sales in the year 0 or base year (1996).
The value 27039 tells us that sales increased at a rate of 27039 per year.

Thus on the basis of past sales the estimated or expected or projected sales for 2010 will be
 Y’= a+bt= 5413+27039*14
                =383959 ($) million


 





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