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

question 106

Short Answer

TABLE 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 4-year period from 2005 to 2009. The following is the resulting regression equation:
log₁₀ = 6.102 + 0.012 X - 0.129 Q₁ - 0.054 Q₂ + 0.098 Q₃
where is the estimated number of contracts in a quarter.
X is the coded quarterly value with X = 0 in the first quarter of 2005.
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 16-12, using the regression equation, what is the forecast for the revenues in the third quarter of 2010?

Identify the criteria for prioritizing customer relationships and investments.

Understand the role of loss-leaders in customer attraction.

Recognize the benefits of loyal customers in terms of cost, referrals, and willingness to pay price premiums.

Determine the initial steps and planning required for effective CRM implementation.

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Definitions:

Owners' Equity

The residual interest in the assets of an entity after deducting liabilities, representing the owners' share in the company.

Gaap

Generally Accepted Accounting Principles are the standard framework of guidelines for financial accounting used in any given jurisdiction, commonly the U.S.

Lifo Inventory

A method of inventory valuation where the last items placed into inventory are the first ones taken out, used to calculate the cost of goods sold and ending inventory.

Basic Earnings Per Share (Eps)

Basic Earnings Per Share (EPS) is a calculation used to gauge a company's profitability on a per-share basis, dividing net earnings available to common shareholders by the average outstanding shares.