Problem 35 A cosmetics manufacturers marketing department ha

Problem 3-5

Solution

A cosmetics manufacturer’s marketing department has developed a linear trend equation that can be used to predict annual sales of its popular Hand & Foot Cream.

Ft = 70 + 15t

where Ft = Annual Sales (000 bottles) , t = 0 corresponds to 1990

Are annual sales increasing or decreasing? By how much?

15 is the slope of the equation so this value show us whether annual sales increase or decrease. The sign of the value is positive that’s why annual sales are increasing by 15000 No of Bottles per year.

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(b) Predict annual sales for the year 2006 using the equation.

F_t = 70 + 15 t= 70+ 15(16) Where t=2006-1990=16

= (70*1000)+(15000 * 16)

= 310000 No of Bottles