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[Solution Library] A forecaster used the following regression equation Q t = a + bt + c 1 D 1 + c 2 D 2 + c 3 D 3 and quarterly sales data during 1999 II

Question: A forecaster used the following regression equation

Q t = a + bt + c 1 D 1 + c 2 D 2 + c 3 D 3

and quarterly sales data during 1999 II to 2007 IV ( t =1,…,35) for an stove manufacturer to obtain the estimation results shown below. Q is quarterly sales, and D 1 , D 2 , and D 3 are seasonal dummy variables for quarters I, II, and III.

DEPENDENT VARIABLE: QT R-SQUARE F-RATIO P-VALUE ON F
OBSERVATIONS: 35 0.9219 88.54 0.0001
PARAMETER STANDARD
VARIABLE ESTIMATE ERROR T-RATIO P-VALUE
INTERCEPT 21.0 6.2 3.39 0.0019
T 0.90 0.24 3.75 0.0007
D1 -8.0 2.60 -3.08 0.0043
D2 -6.0 1.80 -3.33 0.0022
D3 -4.0 0.60 -6.67 0.0001
  1. Do the statistical estimates indicate a trend in sales? If so, what is the trend in units per quarter? Explain.
  2. What are the estimated intercepts for each of the four quarters? Explain.
  3. What level of sales are forecasted sales for the 1st, 2nd, 3rd, and 4th quarters of 2008? Explain.

Price: $2.99
Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document


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