Lexon, Inc

 Lexon, Inc. is a large manufactuer of afforable DVD players. Management recently became aware of rising expenses results from returns of malfunctioning products. As a starting point for further analysis, Paige Jennings,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 is as follows:

2016 Quarter Return Expenses 2017 Quarter Return Expenses 2018 Quarter Return Expenses

1 14,250 1 14,700 1 15,100

2 12,900 2 13,800 2 14,000

3 13,200 3 13,300 3 13,800

4 15,600 4 15,900 4 16,700

The result of a simple regression analysis using all 12 data points yielded the following:

Intercept term $13,500

Coefficient estimate $144.23

R-squared 0.44

SE 1,112.24

a) Plot the data in the order of the dates (find the x and y coordinates)

b) Looking at the graph you prepared for requirement 1, select two representative data points and calculate the quartlery forecast for 2019 using the high-low method.

c) Calculate the quarterly forecasts for 2019 using the results of a regression analysis. Evaluate the results of the regression analysis and make appropriate changes to improve the model.