The Demand for a Product for the Last Six Years

question 22

Multiple Choice

The demand for a product for the last six years has been 15, 15, 17, 18, 20, and 19. The manager wants to predict the demand for this time series using the following simple linear trend equation: tr_t = 12 + 2t. Use this equation to forecast the demand for this product, and then calculate the MAD.

• A) MAD = 1.333
• B) MAD = 1.6
• C) MAD = 2.0
• D) MAD = 2.333
• E) MAD = 2.5

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Definitions:

Total Cost

The sum of fixed and variable costs incurred in the production of goods or services.

Marginal Cost

Marginal cost is the increase in total cost that arises from producing one additional unit of a good or service.

Standby Passenger

A traveler awaiting a seat on a flight or mode of transportation, typically without a reservation for a specific departure.

200-seat Plane

An aircraft designed to accommodate approximately 200 passengers, often used for commercial air travel.