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

question 56

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,to obtain a forecast for the third quarter of 2014 using the model,which of the following sets of values should be used in the regression equation?

• A)X = 22,Q₁ = 0,Q₂ = 0,Q₃ = 0
• B)X = 22,Q₁ = 0,Q₂ = 0,Q₃ = 1
• C)X = 23,Q₁ = 0,Q₂ = 0,Q₃ = 0
• D)X = 23,Q₁ = 0,Q₂ = 0,Q₃ = 1

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