Sales Forecast Modeling

Sales Forecast Modeling. Kerry Weaver, office manager for Pediatric Medicine, Ltd., would like to generate a sales forecast based on the assumption that next year sales are a function of current income, advertising, and advertising by a competing local hospital:
A. Write an equation for predicting sales based on the assumption that the percentage change in sales is three times as large as the percentage change in income and advertising; but only one-fourth as large as, and of the opposite sign of, the percentage change in competitor advertising. Use the symbols S = sales, Y = income, A = advertising, and CA = competitor advertising.
B. During the current year, sales total $1,000,000, local disposable income is $78,750 per household, advertising is $90,000, and competitor advertising is $100,000. Previous period levels were $75,000 (income), $80,000 (advertising), and $125,000 (competitor advertising). Forecast next year sales.

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