What are the potential weakness of the model

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Reference no: EM13213113

The forecasting staff for the Prizer Corp has developed a model to predict sales of its air cushioned ride snowmobiles. The model specifies that sales S vary jointly with disposable personal income Y and the population between ages 15 and 40 Z, and inversely with the price of snowmobiles P. Based on past data, the best estimate of this relationship is S= k YZ/P where k has been estimated ( with past data) equal to 100 1. If Y= $11,000, Z=$1200 and P=20000, what value would you predict for S? 2. What happens if P is reduced to $17500? 3. How would you go about developing a value for k? 4. What are the potential weakness of this model?

Reference no: EM13213113

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