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

question 64

Multiple Choice

SCENARIO 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 2009 to 2013.The following is the resulting regression equation:
log₁₀ Y^ˆ = 6.102 + 0.012 X - 0.129 Q₁ - 0.054 Q₂ + 0.098 Q₃
where
Y^ˆ 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.
Time-Series Forecasting 16-31
-Referring to Scenario 16-12,the best interpretation of the constant 6.102 in the regression equation is:

• A)the fitted value for the first quarter of 2009,prior to seasonal adjustment,is log₁₀(6.102).
• B)the fitted value for the first quarter of 2009,after to seasonal adjustment,is log₁₀(6.102).
• C)the fitted value for the first quarter of 2009,prior to seasonal adjustment,is 10^6.102.
• D)the fitted value for the first quarter of 2009,after to seasonal adjustment,is 10^6.102.

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Definitions:

Product Development

The complete process of bringing a new product or improving an existing one to the market, from idea conception to final production.

Customer Response Time

The duration it takes for a business to reply to a customer inquiry or request.

Customer Profitability Analysis

The process of determining the profit or loss attributed to a particular customer, identifying which relationships are most beneficial.

Product Contribution Analysis

A financial evaluation technique that assesses how individual products contribute to the overall profit of a company based on their contribution margins.