The situation
A model fitted on 30 stores predicts weekly revenue in lakh as 12 + 2.5 × promotional spend in lakh. Observed spend ranged from ₹1 to ₹4 lakh.
Your task
Predict revenue at ₹3 lakh spend and assess a proposal to spend ₹8 lakh.
Reveal step-by-step solution
Set up the problem
Each extra ₹1 lakh of spend is associated with ₹2.5 lakh higher predicted revenue in this model.
Work through the numbers
At ₹3 lakh, predicted revenue is ₹12 + 2.5 × ₹3 = ₹19.5 lakh.
Interpret the result
₹8 lakh is outside the observed range. Test incremental profit with a controlled rollout before using the slope to set budgets.
What to remember
State the slope units and check whether the requested input lies within the data range.