Suppose that the sales manager of a large automotive parts distributor wants to estimate as early as April the total annual sales of a region. On the basis of regional sales, the total sales for the company can also be estimated. If, based on past experience, it is found that the April estimates of annual sales are reasonably accurate, then in furture years the April forecast could be used to revise production schedules and maintain the correct inventory at the retail outlets.
Several factors appear to be related to sales, including the number of retial outlets in the region stocking the company's parts, the number of automobiles in the regin registered as of April 1, and the the total personal income for the first quarter of the year. Five independent variable were finally selected as being the most important (according to the sales manager). Then the data were gathered for a recent year. The total annual sales for that year for each region were also recorded. Note in the following table that fro rgion 1 there were 1,739 retail outlets stocking the company's automotive parts, there were 9,270,000 registered automobiles I the region as of April 1 and so on. The sales for that year were $37,702,000.