Reference no: EM13840029

Regression analysis is a statistic tool that is used to look at different variables and find the best relationship between these variables (Keat, Young & Erfle, 2013). There are two kinds of variables independent or explanatory variable's, which are the variables that influence the other dependent variables (Andale, 2015). In this example of the t-shirt business there are a few explanatory variables that should be included to forecast the domestic sales.

The first explanatory variable is the target market the t-shirts are intended to sell to. This factor is important because it will dictate everything else that goes into making the t-shirt and will determine at which stores the t-shirt should be considered in selling. This variable is the most important predictor also of how the company may do. For example if you are going to target a younger population and make the price of the t-shirts very high this may push them off. This is because the younger population for the most part is just getting started and may not justify spending a lot of money on a t-shirt.

The second variable that can be examined is the price of similar t-shirts, made from the same material and targeted to the same market. This is important because if a competitor were selling a shirt for much less the demand of your t-shirt would be drastically reduced. This variable is also important for the fact this would give the consumer an idea that I really liked this similarly priced shirt so I may like this one also.

The final variable is the production scheme that can be used to make the shirts. This is also an important one because if your company uses automated machines versus hand sowing each shirt this will have a large effect on the supply of the shirts and if supply is very low and there are no shirts for people to purchase then the demand could in essence follow.

As far as international sales go there would be no more additional variables to forecast the international sales. The only thing that could be different is international culture could have different tastes and price points at which they are willing to purchase t-shirts. So each of the variables would have to be re-evaluated in the each of the different international regions that you would place your t-shirts in. This is also due to the fact that different regions also have different tastes and income levels.