Essay
Quarterly sales revenue (in $millions) for a particular company has been modelled using linear regression with indicator variables:
Y = 132 + 2Q1 + 3Q2 - 5Q4 + 2t
where t is time in quarters, with origin March 2012 and Q1, Q2 and Q4 are the indicator variables for March, June and December quarters, respectively.
(a) What is the estimate for December quarter of 2017?
(b) What is the estimate for March 2017?
(c) Separate the differences from your two estimates in parts (a) and (b) into the trend component and the seasonal component.
Correct Answer:

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(a) Y = 132 - 5(1) +2(23) = $173 million...View Answer
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