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

question 60

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 coefficient of Q₃ (0.098) in the regression equation is:

• A)the revenues in the third quarter of a year is approximately 9.8% higher than the average over all 4 quarters.
• B)the revenues in the third quarter of a year is approximately 9.8% higher than it would be during the fourth quarter.
• C)the revenues in the third quarter of a year is approximately 25.31% higher than the average over all 4 quarters.
• D)the revenues in the third quarter of a year is approximately 25.31% higher than it would be during the fourth quarter.

---

Definitions:

Fecal Impaction

Accumulation of hardened fecal material in the rectum or sigmoid colon.

Tap Water Enema

A procedure involving the introduction of tap water into the colon through the rectum to stimulate bowel movement and relieve constipation.

Stimuli Responsive

Referring to materials or systems that change their properties or react in response to specific external conditions or stimuli.

Emollient Laxatives

A type of laxative that softens the stool by increasing the amount of water it absorbs, making it easier to pass.