Economics-Forecasting

  • Consider the sales pattern shown in the data set below: 
Sales Year Time Index
121 2004 0
130 2005 1
145 2006 2
160 2007 3
155 2008 4
179 2009 5
215 2010 6
208 2011 7
235 2012 8
262 2013 9
? 2014 10
? 2015 11

Using the regression feature of Excel, compute the equation of a trend line to forecast sales in 2014 and 2015.  Note, you can use ‘Year’ as the explanatory variable or the ‘Time Index’ as the explanatory variable, but not both in the same equation.  In your opinion, is this a good equation for forecasting future sales? Why or why not?

 

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