You wish to predict the next four quarters’ sales. (You are aware that your product’s sales have no seasonal component.)
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- Using regression techniques, find the linear time trend that best fits the sales data. How well does this equation fit the past data?
- Now estimate the constant-growth equation, Q = br t. Find the
coefficients for b and r. Does this equation perform better than the linear form in part (a)? Explain.
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- Predict sales for the next four quarters using both equations.