Linear regression forecasting model

Reference no: EM1323084

Q1) Some members of management of Fairface Cosmetics think that demand for its products is related to promotional activities of local department stores where cosmetics are sold. Though, others in management believe factors, like local demographics, are stronger determinants of demand behaviour. Following data for local annual promotional expenditures for fairface products and local annual unit sales for fair face lip-gloss have been gathered from 20 stores chosen at arbitrary from various localities:

Store	Unit Sales (1,000s)	Expenditures (1,000s)
1	3.5	$12.60
2	7.2	15.5
3	3.1	10.8
4	1.6	8.7
5	8.9	20.3
6	5.7	21.9
7	6.3	25.6
8	9.1	14.3
9	10.2	15.1
10	7.3	18.7
11	2.5	9.6
12	4.6	12.7
13	8.1	16.3
14	2.5	8.1
15	3	7.5
16	4.8	12.4
17	10.2	17.3
18	5.1	11.2
19	11.3	18.5
20	10.4	16.7

Based on these data, does it seem that strength of relationship between sales and promotions expenditures is enough to permit using linear regression forecasting model? Describe why?

Reference no: EM1323084

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