Question

The owner of a bookstore in a college town notices that demand for certain textbooks peak during certain times of the year.She assumes that these peaks coincide with the beginning of semesters when professors recommend these books to the students.She decides to estimate future sales of these textbooks by measuring the interconnection between sales and announcement of courses that recommend them.Which of the following methods of sales forecasting is she using?
A) Jury of executive opinion method
B) Dependence method
C) Time-series analysis
D) Correlation analysis

Answer 1

Answer: D. Correlation analysis

Explanation:

Since she estimated the future sales of these textbooks by measuring the interconnection between sales and announcement of courses that recommend them, she's using correlation analysis of sales forecast.

Correlation analysis is used to show the relationship that exist between two quantitative variables. We should note that in this case, the dependent variable is sales while the independent variables will be the factors that bring about the fluctuation in sales.

A high correlation simply implies that there's a strong relationship between the variables while a weak correlation implies that the variables are not related.