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

question 95

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, to obtain a forecast for the third quarter of 2010 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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Definitions:

Serial-Position Effect

The tendency to recall the first and last items in a list more easily than those in the middle.

Eyewitness Recall

The process by which individuals remember and report events they have observed, significantly relevant in the context of legal testimony.

Operant Conditioning

A learning process in which the strength of a behavior is modified by reinforcement or punishment, a concept introduced by B.F. Skinner.

Classical Conditioning

A form of learning in which a previously neutral stimulus becomes associated with a stimulus that naturally produces a response.