Deck 16: Time-Series Forecasting

Question 1

The overall upward or downward pattern of the data in an annual time series will be contained in the _____ component.

A)trend
B)cyclical
C)irregular
D)seasonal

Answer 1

trend

Question 2

The annual multiplicative time-series model does not possess _____ component.

A)a trend
B)a cyclical
C)an irregular
D)a seasonal

Answer 2

a seasonal

Question 3

Given a data set with 15 yearly observations,a 3-year moving average will have fewer observations than a 5-year moving average.

Answer 3

False

Question 4

The method of least squares is used on time-series data for

A)eliminating irregular movements.
B)deseasonalizing the data.
C)obtaining the trend equation.
D)exponentially smoothing a series.

Question 5

You need to decide whether you should invest in a particular stock.You would like to invest if the price is likely to rise in the long run.You have data on the daily mean price of this stock over the past 12 months.Your best action is to

A)compute moving averages
B)perform exponential smoothing
C)estimate a least square trend model
D)compute the MAD statistic

Question 6

A least squares linear trend line is just a simple regression line with the years recoded.

Question 7

The effect of an unpredictable,rare event will be contained in the _____ component.

A)trend
B)cyclical
C)irregular
D)seasonal

Question 8

Given a data set with 15 yearly observations,there are only seven 9-year moving averages.

Question 9

Which of the following statements about moving averages is not true?

A)It can be used to smooth a series.
B)It gives equal weight to all values in the computation.
C)It is simpler than the method of exponential smoothing.
D)It gives greater weight to more recent data.

Question 10

A trend is a persistent pattern in annual time-series data that has to be followed for several years.

Question 11

A model that can be used to make predictions about long-term future values of a time series is

A)linear trend.
B)quadratic trend.
C)exponential trend.
D)All of the above.

Question 12

Given a data set with 15 yearly observations,there are only thirteen 3-year moving averages.

Question 13

When using the exponentially weighted moving average for purposes of forecasting rather than smoothing,

A)the previous smoothed value becomes the forecast.
B)the current smoothed value becomes the forecast.
C)the next smoothed value becomes the forecast.
D)None of the above.

Question 14

Which of the following statements about the method of exponential smoothing is not true?

A)It gives greater weight to more recent data.
B)It can be used for forecasting.
C)It uses all earlier observations in each smoothing calculation.
D)It gives greater weight to the earlier observations in the series.

Question 15

Which of the following methods should not be used for short-term forecasts into the future?

A)Exponential smoothing
B)Moving averages
C)Linear trend model
D)Autoregressive modeling

Question 16

The method of moving averages is used

A)to plot a series.
B)to exponentiate a series.
C)to smooth a series.
D)in regression analysis.

Question 17

The fairly regular fluctuations that occur within each year would be contained in the _____ component.

A)trend
B)cyclical
C)irregular
D)seasonal

Question 18

Which of the following is not an advantage of exponential smoothing?

A)It enables you to perform one-period ahead forecasting.
B)It enables you to perform more than one-period ahead forecasting.
C)It enables you to smooth out seasonal components.
D)It enables you to smooth out cyclical components.

Question 19

When a time series appears to be increasing at an increasing rate,such that percentage difference from value to value is constant,the appropriate model to fit is the

A)linear trend.
B)quadratic trend.
C)exponential trend.
D)None of the above.

Question 20

If a time series does not exhibit a long-term trend,the method of exponential smoothing may be used to obtain short-term predictions about the future.

Question 21

SCENARIO 16-1
The number of cases of chardonnay wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-1,does there appear to be a relationship between year and the number of cases of wine sold?

A)No,there appears to be no relationship between the year and the number of cases of wine sold by the vintner.
B)Yes,there appears to be a slight negative linear relationship between the year and the number of cases of wine sold by the vintner.
C)Yes,there appears to be a slight positive relationship between the year and the number of cases of wine sold by the vintner.
D)Yes,there appears to be a negative nonlinear relationship between the year and the number of cases of wine sold by the vintner.

Question 22

A second-order autoregressive model for average mortgage rate is: Rate_i = - 2.0 + 1.8(Rate)_i-1 - 0.5 (Rate)_i-2.
If the average mortgage rate in 2012 was 7.0,and in 2011 was 6.4,the forecast for 2014 is .

Question 23

The method of least squares may be used to estimate both linear and curvilinear trends.

Question 24

Each forecast using the method of exponential smoothing depends on all the previous observations in the time series.

Question 25

Microsoft Excel was used to obtain the following quadratic trend equation: Sales = 100 - 10X + 15X².
The data used was from 2004 through 2013 coded 0 to 9.The forecast for 2014 is .

Question 26

Which of the following terms describes the overall long-term tendency of a time series?

A)Trend
B)Cyclical component
C)Irregular component
D)Seasonal component

Question 27

To assess the adequacy of a forecasting model,one measure that is often used is

A)quadratic trend analysis.
B)the MAD.
C)exponential smoothing.
D)moving averages.

Question 28

The MAD is a measure of the mean of the absolute values of the deviations between the actual and the fitted values in a given time series.

Question 29

A second-order autoregressive model for average mortgage rate is: Rate_i = - 2.0 + 1.8(Rate)_i-1 - 0.5 (Rate)_i-2.
If the average mortgage rate in 2012 was 7.0,and in 2011 was 6.4,the forecast for 2013 is .

Question 30

In selecting a forecasting model,you should perform a residual analysis.

Question 31

The principle of parsimony indicates that the simplest model that gets the job done adequately should be used.

Question 32

The following is the list of MAD statistics for each of the models you have estimated from time-series data: Based on the MAD criterion,the most appropriate model is

A)linear trend.
B)quadratic trend.
C)exponential trend.
D)second-order autoregressive.

Question 33

A first-order autoregressive model for stock sales is: Sales_i = 800 + 1.2(Sales)_i-1.
If sales in 2012 is 6,000,the forecast of sales for 2013 is .

Question 34

SCENARIO 16-2
The monthly advertising expenditures of a department store chain (in $1,000,000s)were collected over the last decade.The last 14 months of this time series follows:

Referring to Scenario 16-2,set up a scatter plot (i.e. ,time-series plot)with months on the horizontal X-axis.

Question 35

In selecting an appropriate forecasting model,the following approaches are suggested:

A)Perform a residual analysis.
B)Measure the size of the forecasting error.
C)Use the principle of parsimony.
D)All of the above.

Question 36

SCENARIO 16-2
The monthly advertising expenditures of a department store chain (in $1,000,000s)were collected over the last decade.The last 14 months of this time series follows:

Referring to Scenario 16-2,advertising expenditures appear to be increasing in a linear rather than curvilinear manner over time.

Question 37

Which of the following terms describes the up and down movements of a time series that vary both in length and intensity?

A)Trend
B)Cyclical component
C)Irregular component
D)Seasonal component

Question 38

MAD is the summation of the residuals divided by the sample size.

Question 39

The cyclical component of a time series

A)represents periodic fluctuations which reoccur within 1 year.
B)represents periodic fluctuations which usually occur in 2 or more years.
C)is obtained by adjusting for the seasonal variation.
D)is obtained by adjusting for calendar variation.

Question 40

The manager of a company believed that her company's profits were following an exponential trend.She used Microsoft Excel to obtain a prediction equation for the logarithm (base 10)of profits:
log₁₀(Profits)= 2 + 0.3X
The data she used were from 2007 through 2012 coded 0 to 5.The forecast for 2013 profits is .

Question 41

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-3,suppose the last two smoothed values are 81 and 96 (Note: they are not).What would you forecast as the value of the time series for September?

A)81
B)86
C)91
D)96

Question 42

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-3,suppose the last two smoothed values are 81 and 96 (Note: they are not).What would you forecast as the value of the time series for July?

A)81
B)86
C)91
D)96

Question 43

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,a centered 5-year moving average is to be constructed for the wine sales.The moving average for 2010 is .

Question 44

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,exponential smoothing with a weight or smoothing constant of
0.2 will be used to smooth the wine sales.The value of E₂,the smoothed value for 2006 is
.

Question 45

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,a centered 5-year moving average is to be constructed for the wine sales.The moving average for 2007 is .

Question 46

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-3,if this series is smoothed using exponential smoothing with a smoothing constant of 1/3,what would be the first value?

A)36
B)39
C)42
D)45

Question 47

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,a centered 3-year moving average is to be constructed for the wine sales.The result of this process will lead to a total of _____ moving averages.

Question 48

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,construct a centered 5-year moving average for the wine sales.

Question 49

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-3,if a three-month moving average is used to smooth this series,what would be the last calculated value?

A)72
B)93
C)114
D)126

Question 50

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-3,if this series is smoothed using exponential smoothing with a smoothing constant of 1/3,what would be the second value?

A)39
B)42
C)45
D)53

Question 51

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,exponential smoothing with a weight or smoothing constant of
0.2 will be used to smooth the wine sales.The value of E₄,the smoothed value for 2008 is
.

Question 52

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,a centered 3-year moving average is to be constructed for the wine sales.The moving average for 2009 is .

Question 53

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,construct a centered 3-year moving average for the wine sales.

Question 54

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,exponential smoothing with a weight or smoothing constant of
0.2 will be used to forecast wine sales.The forecast for 2013 is .

Question 55

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,a centered 5-year moving average is to be constructed for the wine sales.The number of moving averages that will be calculated is .

Question 56

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-3,if this series is smoothed using exponential smoothing with a smoothing constant of 1/3,how many values would it have?

A)3
B)4
C)5
D)6

Question 57

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-3,if this series is smoothed using exponential smoothing with a smoothing constant of 1/3,what would be the third value?

A)53
B)65.33
C)68
D)81

Question 58

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-3,if a three-month moving average is used to smooth this series,how many forecasts would the analysis have?

A)2
B)3
C)4
D)5

Question 59

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-3,if a three-month moving average is used to smooth this series,what would be the second calculated value?

A)36
B)40.5
C)54
D)72

Question 60

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,a centered 3-year moving average is to be constructed for the wine sales.The moving average for 2006 is .

Question 61

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,the number of arrivals will be smoothed with a 5-term moving average.The first smoothed value will be .

Question 62

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,exponentially smooth the number of arrivals using a smoothing constant of 0.25.

Question 63

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,exponentially smooth the number of arrivals using a smoothing constant of 0.1.

Question 64

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,the number of arrivals will be exponentially smoothed with a smoothing constant of 0.25.The forecast of the number of arrivals on the seventh Monday will be .

Question 65

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,exponential smoothing with a weight or smoothing constant of
0.4 will be used to smooth the wine sales.The value of E₅,the smoothed value for 2009 is .

Question 66

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,exponential smoothing with a weight or smoothing constant of
0.4 will be used to forecast wine sales.The forecast for 2013 is .

Question 67

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,the number of arrivals will be exponentially smoothed with a smoothing constant of 0.25.The smoothed value for the second Monday will be .

Question 68

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,the number of arrivals will be smoothed with a 3-term moving average.The last smoothed value will be .

Question 69

SCENARIO 16-6
The president of a chain of department stores believes that her stores' total sales have been showing a linear trend since 1993.She uses Microsoft Excel to obtain the partial output below.The dependent variable is sales (in millions of dollars),while the independent variable is coded years,where 1993 is coded as 0,1994 is coded as 1,etc.

Referring to Scenario 16-6,the fitted trend value (in millions of dollars)for 1993 is .

Question 70

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,the number of arrivals will be smoothed with a 5-term moving average.The last smoothed value will be .

Question 71

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,exponentially smooth the wine sales with a weight or smoothing constant of 0.2.

Question 72

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,the number of arrivals will be exponentially smoothed with a smoothing constant of 0.1.The smoothed value for the second Monday will be .

Question 73

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,the number of arrivals will be smoothed with a 3-term moving average.The first smoothed value will be .

Question 74

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,the number of arrivals will be exponentially smoothed with a smoothing constant of 0.1.The smoothed value for the sixth Monday will be .

Question 75

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,the number of arrivals will be exponentially smoothed with a smoothing constant of 0.1.Then the forecast for the seventh Monday will be .

Question 76

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,exponential smoothing with a weight or smoothing constant of
0.4 will be used to smooth the wine sales.The value of E₂,the smoothed value for 2006 is .

Question 77

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,the number of arrivals will be exponentially smoothed with a smoothing constant of 0.25.The smoothed value for the third Monday will be .

Question 78

SCENARIO 16-4
The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows.
Referring to Scenario 16-4,exponentially smooth the wine sales with a weight or smoothing constant of 0.4.

Question 79

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6 successive Mondays were: 60,72,96,84,36,and 48.
Referring to Scenario 16-5,the number of arrivals will be smoothed with a 3-term moving average.There will be a total of _____ smoothed values.

Question 80

SCENARIO 16-6
The president of a chain of department stores believes that her stores' total sales have been showing a linear trend since 1993.She uses Microsoft Excel to obtain the partial output below.The dependent variable is sales (in millions of dollars),while the independent variable is coded years,where 1993 is coded as 0,1994 is coded as 1,etc.

Referring to Scenario 16-6,the fitted trend value (in millions of dollars)for 1998 is .