Exam 18: Time Series and Forecasting

In which of the following situations is the use of qualitative forecasts most appropriate?

A time series is ________.

Prices of crude oil have been steadily rising over the last two years (The Wall Street Journal, December 14, 2010). The monthly data on price per gallon of unleaded regular gasoline in the United States from January 2009 to December 2010 were available. Three trend models were created starting with t = 1 and the following output was generated. Which of the following would be a difference in the forecasts for the price of regular unleaded gasoline for February 2011 comparing two trend models: cubic and quadratic?

Which of the following formulas is used to make forecasts using the exponential trend model?

Which of the following models is not called a causal forecasting model?

In forecasting methods, the mean square error (MSE) is computed by dividing the sum of squared residuals (errors) by the number of observations n for which the residuals are available.

When a time series has both trend and seasonality, it is necessary to model seasonality along with trend.

Quarterly sales of a department store for the last seven years are given in the following table. The scatterplot shows that the quarterly sales have an increasing trend and seasonality. A linear regression model given by Sales = β₀ + β₁Qtr1 + β₂Qtr2 + β₃Qtr3 + β₄t + ε, where t is the time period (t = 1, ..., 28) and Qtr1, Qtr2, and Qtr3 are quarter dummies, is estimated and then used to make forecasts. For the regression model, the following partial output is available. Using the regression equation for the linear trend model with seasonal dummy variables, what can be said about the sales in Quarter 4 compared to the sales in Quarter 1?

The past monthly demands are shown below. The naïve method, that is, the one-period moving average method, is applied to make forecasts. What is the mean square error of the forecasts?

The regression y_t = β₀ + β₁y_t-1 + ε_t is referred to as a(n) ________ model of order one.

The following ratio-to-moving averages for the seasonally adjusted series were found by the decomposition method applied on a time series representing quarterly sales for the last three years: Which of the following is the seasonal index for the fourth quarter?

When the forecasting method of seasonal dummy variables is applied on a quarterly time series, four dummy variables are needed.

Quarterly sales of a department store for the last seven years are given in the following table. The scatterplot shows that the quarterly sales have an increasing trend and seasonality. A linear regression model given by Sales = β₀ + β₁Qtr1 + β₂Qtr2 + β₃Qtr3 + β₄t + ε, where t is the time period (t = 1, ..., 28) and Qtr1, Qtr2, and Qtr3 are quarter dummies, is estimated and then used to make forecasts. For the regression model, the following partial output is available. Using the regression equation for the linear trend model with seasonal dummy variables, what is the sales forecast for the fourth quarter of Year 8?

In comparison with the linear trend model, which of the following is not true of the cubic trend model?

After we have estimated the trend and the seasonal components, we ________ them to make a forecast.

Under which of the following conditions is qualitative forecasting considered attractive?

To extract the trend from a time series, we first eliminate seasonal ________ by dividing the original series y, by its corresponding adjusted seasonal index.

The following table includes the information about a monthly time series. When the exponential smoothing method with α = 0.1 is applied, what is the MAD?

The exponential trend model is attractive when the increase in the series gets larger over time.

The following table includes the information about a monthly time series. When the exponential smoothing method with α = 0.1 is applied, what is the MSE?