A store wishes to predict net profit as a function of sales for the next year. The following table gives the years 1998 to 2005.
|
Year
|
Sales
(thousands of dollars)
|
Net Profit
|
|
1998
|
55
|
4.5
|
|
1999
|
58
|
9.2
|
|
2000
|
67
|
9.8
|
|
2001
|
80
|
-3.2
|
|
2002
|
72
|
2.8
|
|
2003
|
73
|
3.5
|
|
2004
|
84
|
-2.4
|
|
2005
|
83
|
-2.8
|
- Graph the points from 1998 through 2005 on a scatter diagram using Sales as the independent variable and Net Profit as the dependent variable.
- Draw the regression line on the graph you constructed in Part (a).
- What is the value of the coefficient of determination for this regression model? Comment on the strength of the regression line for this model.
- What is the predicted net profit for 2006 if sales are expected to be 125?