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Choose the relationship which best predicts the dependent variable
After exploring a diversity of relationships, you should select the one that can best be employed in predicting the dependent variable. Generally, this will be the relationship which best predicts the values of the dependent variable. The high correlation (relationship) among a potential independent variable and the dependent variable frequently indicates that the independent variable will be a good predictive tool. Though, you should reassure that the value of the independent variable is accessible in order for you to make timely estimates. When it is not, you might require considering other alternatives.
There are different techniques which can be used to estimate the cost function. Examples comprise: • Engineering technique• Account analysis• Regression analysis• High low technique• Time series analysis• Simulation analysis
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Testing the Slope The strong point of the relationship among the dependent variable and each of the independent variables can be determined using 3 methods: 1) Correlation
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UNCERTAINTY OF DEMAND Demand is the most troublesome variable to predict accurately. Actually, demand may fluctuate from day to day, from week to week or from month to month. T
the suitability of incremental budgeting to a stable and static environment
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