The general manager of a building materials production plant feels the demand for plaster board shipments may be related to the number of constructions permits issued in the country during the previous quarter. The manager has collected the data shown in the accompanying table.
Construction permits
Plaster board shipments
15
6
9
4
40
16
20
6
25
13
25
9
15
10
35
16
Required:
a) Derive a regression forecasting equation?
b) Determine plaster board demand when the number of shipments is
i. 30
ii. 35
iii. 40
1
a) The regression forecasting equation is: Plaster board shipments = 0.5*Construction permits + 4.5
b) i. Plaster board demand when the number of shipments is 30: 30 = 0.5*Construction permits + 4.5
Construction permits = 35
ii. Plaster board demand when the number of shipments is 35: 35 = 0.5*Construction permits + 4.5
Construction permits = 37.5
iii. Plaster board demand when the number of shipments is 40: 40 = 0.5*Construction permits + 4.5
Construction permits = 40