Question

The numbers of copies of a college textbook sold quarterly over the past four years are: Since the time series has trend and seasonal pattern, to forecast the quarterly sales of the textbook, the following regression equation was found:

yt= 2120 - 620 Qtr1t - 1320Qtr2t+290Qtr3t + 24t

where Qtr1t , Qtr2t and Qtr3t are dummy variables corresponding to Quarters 1, 2 and 3, and t = time period.

The sales forecast for Quarter 4 of the next year is:_______

a. 2600
b. 1232
c. 2006
d. 1874

The sales forecast for Quarter 1 of the next year is

a. 1908
b. 1432
c. 2206
d. 1874

Answer 1

1. 2,600 textbook.
2. 1,908 textbooks.

Step-by-step explanation:

1. The equation is based on the past four years so in calculating the time period for Quarter 4 next year, the time period is:

t = (4 * 4 periods) + 4 periods next year

t = 20

Sales forecast is therefore:

= 2,120 + 24t

= 2,120 + 24 * 20

= 2,600 textbooks

2. The time period will be:

t = (4 * 4 periods) + 1 quarter

t = 17 quarters

Sales forecast:

= 2,120 - 620 + 24t

= 2,120 - 620 + 24 * 17

= 1,908 textbooks.