Summary 177air conditioning $11,000. As a purely financial matter, which
improvements, if any, would be worth undertaking?
S4. There is considerable debate within your firm concerning the effect of
advertising on sales. The marketing department believes advertising has
a large positive effect; others are not so sure. For instance, the
production and technical staffs believe the quality of the product itself
largely determines sales. To clarify the debate, you have gathered the
following data for the last 24 quarters.Quarter Unit Sales Advertising
1 120 39
2 115 36
39 7 3 8
4 118 39
58 8 2 3
66 3 2 2
78 2 4 0
88 0 4 2
99 5 3 6
10 106 49
11 105 66
12 136 65
13 122 51
14 112 56
15 116 60
16 104 51
17 137 55
18 114 47
19 104 50
20 122 47
21 108 32
22 94 41
23 98 45
24 104 34a. Does advertising affect unit sales? Base your answer on a regression
analysis.
b. Others in the company argue that the last quarter’s sales best predict
this quarter’s sales. Test this hypothesis via regression analysis.
Compare the performances of the regressions in parts (a) and (b).
c. Some believe the impact of advertising takes time (as long as three
months) to affect sales. Perform a regression to test this hypothesis.c04EstimatingandForecastingDemand.qxd 9/5/11 5:49 PM Page 177