TABLE 16-13 A Local Store Developed a Multiplicative Time-Series Model to Forecast

question 134

Multiple Choice

TABLE 16-13
A local store developed a multiplicative time-series model to forecast its revenues in future quarters, using quarterly data on its revenues during the 4-year period from 1998 to 2002. The following is the resulting regression equation:
log₁₀Y^{^} = 6.102 + 0.012 X - 0.129 Q₁ - 0.054 Q₂ + 0.098 Q₃
where
Y^{^} is the estimated number of contracts in a quarter
X is the coded quarterly value with X = 0 in the first quarter of 1998.
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 16-13, to obtain a forecast for the fourth quarter of 1999 using the model, which of the following sets of values should be used in the regression equation?

• A) X = 8, Q₁ = 1, Q₂ = 0, Q₃ = 0
• B) X = 7, Q₁ = 0, Q₂ = 0, Q₃ = 0
• C) X = 8,Q₁ = 0, Q₂ = 0, Q₃ = 0
• D) X = 7, Q₁ = 1, Q₂ = 0, Q₃ = 0

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Definitions:

HSN

Home Shopping Network, a television network that broadcasts live retail programming 24 hours a day.

Nonstore Retailing

Selling goods or services outside of a traditional retail establishment, such as online, direct mail, or telemarketing.

Direct Selling

A retail channel where sales are made directly to consumers, bypassing traditional retail environments.

Vending Machines

Automated machines that provide items such as snacks, beverages, and other products to consumers after money, a credit card, or a specially designed card is inserted into the machine.