This research provides a case study of the application of statistical analysis in business management decisions. An assumption is made that the business in question is a household appliance retailer. The manager of the business is concerned because of reports that unemployment is increasing. The concerns are related to the effects rising unemployment may have on sales levels, and, in turn, how large a product inventory should be stocked. It was decided that a statistical analysis would be performed to assess the impact on durable goods sales of changes in the unemployment rate for persons 20 years old and older, and to project future changes in sales on that assessment. Inventory stocking level decisions, in turn, will be based on sales projections.
STATISTICAL ANALYSIS PROCEDURES
The principal statistical analysis procedure which will be used in assessing the relationship between changes in durable goods sales and changes in the unemployment rate is simple regression analysis. Data included in the analysis will be for the 1971 1990 time period, on an annual basis. Additionally, however, both two and three period moving average data will be calculated, and subjected to regression analysis, and both the base and moving average data for durable goods will be lagged one period, and subjected to regression analysis. The reason for using both moving average and lagged data, in addition to the basic data, is to determine which set of data combinations (basic, basic with durable goods lagged one period, moving average two periods, moving average two periods with durable goods lagged one period, moving average three periods, or moving average three periods with durable goods lagged one period) provides the strongest result with result to the Pearson product moment correlation coefficient.
Simple regression analysis involves the analysis of the relationship between one dependent variable and one explanatory, or indep...