Exam 16: Time Series and Forecasting

The following linear trend equation was developed for annual sales from 1995 to 2001 with 1995 the base or zero year. ŷ = 500 + 60t ($000). What are the estimated sales for 2005 ($000)?

For a time series beginning with 1988 and extending up to 2001, which year would be coded with a one when using the coded method?

i. In the linear trend equation, t is any value that corresponds with a time period, i.e., month or quarter. ii. The least squares method of computing the equation for a straight line going through the data of interest gives the "best fitting" line. iii. If the sales, production or other data over a period of time tend to approximate a straight-line trend, the equation developed by the least squares method cannot be used to forecast sales for a future period.

i. The moving average method merely smooths out the fluctuations in the data. ii. The moving average method averages out cyclical (C) and irregular (I) components. iii. Sales, production and other economic and business series usually have periods of oscillation that are of equal length or identical amplitudes.

Listed below is the net sales in $ million for Home Depot Inc., and its subsidiaries from 1994 to 2003. Using the printout below, what are the estimated sales for 2009?

The following linear trend equation was developed for the annual sales of the Jordan Manufacturing Company. ŷ = 500 + 60t ($000). How much are sales increasing?

i. A time series is a collection of data recorded over a period of time, usually monthly, quarterly, or yearly. ii. Long-term forecasts are usually from one year to more than 10 years into the future. iii. A forecast is considered necessary in order to have the raw materials, production facilities, and staff available to meet estimated future demands.

The events on Sept 11, 2001 exerted an impact on the economy that could be classified as:

i. The ratio-to-moving-average method eliminates the seasonal, cyclical and irregular components from the original data (y). ii. The cyclical component of a time series is described in terms relative to the seasonal index. iii. The irregular component of a time series is the easiest to measure.

In the linear trend equation, how is the average change in the dependent variable represented for every unit change in time?

Given a linear time series trend, = - 5.2 + 3.1t, what is the forecast for 2015 if the t = 0 in 2007?

Listed below is the net sales in $ million for Home Depot Inc., and its subsidiaries from 1994 to 2003. Using the printout below, what are the estimated sales for 2005?

i. The reason for deseasonalizing a sales series is to remove trend and cyclical fluctuations so that we can study seasonal fluctuations. ii. Using the ratio-to-moving-average method, dividing the actual sales for a month by the typical seasonal for that month results in a figure that includes only trend, cycle and irregular fluctuations. This procedure is called deseasonalizing the sales. iii. Knowing the seasonal pattern in the form of indexes allows the retailer to deseasonalize sales. This is accomplished by dividing the actual sales for a month by the typical index for that month.

The table below shows the sales for a plastics manufacturer recorded over the past year. The seasonal indexes for each quarter are also provided. To track the trend for these four quarters, use the indexes to deseasonalize the sales data. Overall, based on these four quarters, sales:

i. The cyclical component of a time series is described in terms relative to the seasonal index. ii. The irregular component of a time series is the easiest to measure. iii. The ratio-to-moving average method removes the time series trend component, resulting in 12 numbers that are called specific seasonals.

A plastics manufacturing performed a quarterly time series analysis for demands over the last five years (periods 1 through 20). The analysis resulted in the following trend equation and seasonal indexes: = 920.0 + 22.6 t Based on the seasonal indexes, which quarter is expect to have 25% less demand than predicted by the trend line?

The Westberg Electric Company sells electric motors. The monthly trend equation, based on four years of monthly data, is Y' = 4.4 + 0.5t. The seasonal factor for the month of June is 105. Determine the seasonally adjusted forecast for June of the fifth year.

Listed below is the net sales in $ million for Home Depot Inc., and its subsidiaries from 1994 to 2003. Using the printout below, what are the estimated sales for 2006?

The table below shows the sales for a plastics manufacturer recorded over the past year. The seasonal indexes for each quarter are also provided). To track the trend for these four quarters, use the indexes to deseasonalize the sales data) What are deseasonalized sales for quarter 2?

i. The irregular component of a time series is the easiest to measure. ii. The ratio-to-moving average method removes the time series trend component, resulting in 12 numbers that are called specific seasonals. iii. For a quarterly time series, the initial step, using the ratio-to-moving average method, is to remove the seasonal components from the time series using a 3-month centered moving average.