SCENARIO 16-15-B
You Are the CEO of a Diary Company

question 19

True/False

SCENARIO 16-15-B
You are the CEO of a diary company. The total milk production (in gallons) from your company
over the past 30 years are presented below and also contained in the Excel file SCENARIO 16-
15-B.XLSX. $$\begin{array} { l r r r r r r r r r r r } \text { Year } & 1986 & 1987 & 1988 & 1989 & 1990 & 1991 & 1992 & 1993 & 1994 & 1995 \\& 1996 & 1997 & 1998 & 1999 & 2000 & 2001 & 2002 & 2003 & 2004 & 2005 \\& 2006 & 2007 & 2008 & 2009 & 2010 & 2011 & 2012 & 2013 & 2014 & 2015 \\\text { Milk } & 150201 & 193718 & 212520 & 214553 & 237507 & 248069 & 241824 & 234627 & 252049 & 252029 \\\text { Prod } & & & & & & & & & \\& 263449 & 260689 & 247900 & 260059 & 268197 & 249477 & 246216 & 265236 & 256364 & 241705 \\& 245932 & 243529 & 241551 & 247697 & 248454 & 241974 & 235823 & 243517 & 238490 & 248606\end{array}$$ You want to predict your company's future total milk production using the linear trend, quadratic
trend, exponential trend, first-order autoregressive, second-order autoregressive and third-order
autoregressive model.
-Referring to Scenario 16-15-B, you can reject the null hypothesis for testing
the appropriateness of the third-order autoregressive model at the 5% level of significance.

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Definitions:

Exchange Rate

The value of one currency for the purpose of conversion to another, determining how much of one currency can be exchanged for another.

Relative Purchasing Power Parity

A theory which posits that the rate of inflation in two different countries over a specific period affects the exchange rate between their two currencies.

Expected Inflation

The rate at which the general level of prices for goods and services is expected to rise, eroding purchasing power.

Euros

The official currency of the Eurozone, which is used by 19 of the 27 European Union countries.