​A Financial Manager Needs to Forecast the Level of Inventory

question 23

Essay

​A financial manager needs to forecast the level of inventory. Currently inventory is 60 percent of sales. If the anticipated level of sales is $20,000, what is the level of inventory forecasted by the percent of sales method of forecasting? If the equation relating inventory and sales is I = $789 + 0.54S, what is the level of inventory forecasted by the regression equation?

---

Definitions:

Arousal

A state of physiological and psychological alertness and responsiveness, varying in intensity from low to high.

Resistance

The act of opposing or withstanding; in psychology, it refers to the opposition to discussing, thinking about, or processing emotionally painful memories or feelings.

General Adaptation Syndrome

A three-stage response model describing the body's short-term and long-term reactions to stress, composed of alarm, resistance, and exhaustion phases.

Physiological Exhaustion

A state of extreme physical or mental fatigue brought about by excessive strain or use.