The forecasting staff for the pizzer Corporation has developed a model to predict sales of its air-cushioned ride snowmobiles. The mobiles specifies that sales S vary jointly with disposable personal income Y and the population between ages 15 and 40, Z and inversely with the price of a sownmpbiles p. Based on past data the best estimate of this relationship is
S=K YZ/P
Where K has been estimate (with past date ) to equal 100.
a. If Y =$11,000, Z=$1,200 and P=$20,000 what value would you predict for S?
b. What happen if P is reduced to $17,500?
c. How would you go about developing a value for K?
d. What are the potential weaknesses of this model?