TABLE 16-12 A Local Store Developed a Multiplicative Time-Series Model to Forecast

question 103

Multiple Choice

TABLE 16-12
A local store developed a multiplicative time-series model to forecast its revenues in future quarters,using quarterly data on its revenues during the 5-year period from 2008 to 2012.The following is the resulting regression equation:
log₁₀
= 6.102 + 0.012 X - 0.129 Q₁ - 0.054 Q₂ + 0.098 Q₃
where is the estimated number of contracts in a quarter
X is the coded quarterly value with X = 0 in the first quarter of 2008
Q₁ is a dummy variable equal to 1 in the first quarter of a year and 0 otherwise
Q₂ is a dummy variable equal to 1 in the second quarter of a year and 0 otherwise is a dummy variable equal to 1 in the third quarter of a year and 0 otherwise
-Referring to Table 16-12,the best interpretation of the coefficient of Q₃ (0.098) in the regression equation is

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Definitions:

Selling Price

The amount at which a product or service is sold to customers, often determined by costs, market demand, and competition.

Investment

The process of distributing assets, often funds, in anticipation of earning revenue or profit.

Desired Return

The specific amount of profit a company aims to achieve on its investment or project, often expressed as a percentage.

Target Cost

The market-driven price that a product must meet or go below, after subtracting the desired profit margin, to remain competitive.