Clothes for U Is a Large Merchandiser of Apparel for Budget-Minded

question 56

Essay

Clothes for U is a large merchandiser of apparel for budget-minded families.Management recently became concerned about the amount of inventory carrying costs and transportation costs between warehouses and retail outlets.As a starting point in further analyses, Gregory Gonzales, the controller, wants to test different forecasting methods and then use the best one to forecast quarterly expenses for 2019.The relevant data for the previous three years follows: The results of a simple regression analysis using all 12 data points yielded an intercept of $11,854.55 and a coefficient for the independent variable of $126.22 (R-squared = 0.19, t = 1.5, SE = 974).
Required:
(1) Determine the quarterly forecasts for 2019 using the high-low method and also regression analysis. Recommend which method Gregory should use and explain why.
(2) How does your analysis in requirement 1 change if Clothes for U is involved in global sourcing of products for its stores?

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Definitions:

Brand Loyal Customers

Refers to consumers who consistently purchase the same brand over alternatives due to satisfaction, trust, or preference.

Price Sensitivity

The extent to which price fluctuations impact the demand for a good or service.

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The practice of collecting information about a person's experience or opinions regarding a product, service, or process for the purpose of improvement.