A department store analyst is interested in using the change in price of sugar in any given month to predict the change in price of candy the following month. She observes the following monthly sequence of sugar prices (not sugar price changes):
80,82,85,81,80,80,80,84,88,89,90,88,84
Candy prices in the same month are:
105,100,105,114,107,105,104,105,110,117,120,121,118
a) Construct the appropriate scales for graphing and plot the data.
b) Find the estimated regression line.
c) What do you conclude about the relationship between the change in sugar price and the change in candy price? Might this knowledge lead to improved forecasts? How can that help store operations?