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

question 157

Multiple Choice

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, in testing the significance of the coefficient of X in the regression equation (0.012) which has a p-value of 0.0000. Which of the following is the best interpretation of this result?

• A) The quarterly growth rate in revenues is significantly different from 0% (α = 0.05).
• B) The quarterly growth rate in revenues is not significantly different from 0% (α = 0.05).
• C) The quarterly growth rate in revenues is significantly different from 1.2% (α = 0.05).
• D) The quarterly growth rate in revenues is not significantly different from 1.2% (α = 0.05).

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Definitions:

Cereal

A food product made from processed grains, typically eaten as breakfast and often enriched with vitamins and minerals.

Materials Quantity Variance

The difference between the expected and actual quantity of materials used in production, reflecting efficiency in materials usage.

Materials Standards

The established specifications regarding the quality and quantity of materials to be used in production.

Operations

Activities involved in the day-to-day functioning of a business or organization, aimed at producing goods or services.