Organizations face an increasingly competitive environment, both in their local markets and in the international arena. They face challenges from leaner, highly dynamic companies, not to mention instability brought about by acquisitions, mergers, and demands from an ever more discriminating consumer. Public sector organizations search for a more effective way to deliver policies and increase scales of efficiency. In this fast moving environment, many companies are finding their existing project and resource scheduling systems are not sufficient to accommodate change or optimize their programs, benefits planning, and tracking. Managers struggle as they attempt to find ways to move the business forward.
At Dominion Building Products (DBP), one of the important elements in becoming a leaner operation is how to balance the inventory dollar levels against the sales dollar levels. A regressive analysis study between inventory and sales dollars could provide the direction needed to find the balance and lean financial requirements of DBP's upper management team.
Description of the Regression Analysis
Regression analysis is a statistical tool used to "estimate the value of variable based on the value of another" (University of Phoenix, 2004, p. 429). The goal of regression analysis is to determine the values of parameters for a function that cause the function to best fit a set of selected data observations. The management team at DBP is feeling pressure to reduce their current inventory levels; however, many believe that a major reduction in inventory levels will cause a decrease in sales and poorer customer service. Some believe that if the products are not readily available, customers will look elsewhere to make these purchases.
A relationship exists between the monthly inventory dollars and the monthly sales dollars. By analyzing the sales dollars and the inventory dollars, the relationship between them will help determine the a reduced level of...