Dominion Sales and Inventory issue – Regression Analysis

Essay by Nabil MohiadeenUniversity, Bachelor's May 2007

download word file, 6 pages 4.5

IntroductionIn today's business environments, organizations face a great deal of challenges within competitive environment within the international arena and the local markets. They face challenges even from leaner, highly dynamic companies, which in many cases caused by the ongoing acquisitions, mergers, and demands from an ever more discriminating consumer. The public organizations search for different 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, 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 Dominion's upper management team.

Description of the Regression AnalysisUniversity of Phoenix defined regression analysis as a statistical tool used to estimate the value of variable based on the value of another (University of Phoenix, 2006). The objective of regression analysis is to determine the values of factors for a function that cause the function to best fit a set of known data observations. The Dominion management team wanted to reduce their current inventory levels; however, other management member believes that major reduction in inventory levels may cause a decrease in sales and impact negatively the customer satisfactions if the products are not readily available, which in return customers will look elsewhere to make these purchases.

Analyzing the data, provided clear that a relationship exists between the annual inventory dollars and the annual sales dollars. Knowing the relationship between the sales dollars and the inventory...