TABLE 16-14 a Contractor Developed a Multiplicative Time-Series Model to Forecast the Forecast

question 101

Multiple Choice

TABLE 16-14
A contractor developed a multiplicative time-series model to forecast the number of contracts in future quarters, using quarterly data on number of contracts during the 3-year period from 2008 to 2010. The following is the resulting regression equation:
ln Ŷ = 3.37 + 0.117 X - 0.083 Q₁ + 1.28 Q₂ + 0.617 Q₃
where Ŷ 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.
Q₃ is a dummy variable equal to 1 in the third quarter of a year and 0 otherwise.
-Referring to Table 16-14, the best interpretation of the coefficient of X (0.117) in the regression equation is

• A) the quarterly compound growth rate in contracts is around 30.92%.
• B) the annually compound growth rate in contracts is around 30.92%.
• C) the quarterly compound growth rate in contracts is around 11.7%.
• D) the annually compound growth rate in contracts is around 11.7%.

---

Definitions:

Operating Data

Information or statistics that pertain to the day-to-day functions and performance of a business or organization.

Indirect Factory Expenses

Costs associated with manufacturing that are not directly tied to the production of goods, such as utilities and maintenance.

Square Footage

Square Footage is the measurement of area expressed in square feet, commonly used to determine the size of a room or overall space.

Salaries

Payments made to employees, typically on a regular basis, for performing their job duties.