Assignment 3 2 
Assignment 3
1. The Accuweather Corporation manufactures barometers and thermometers for weather forecasters. In an attempt to forecast its future needs for mercury, Accuweather's chief economist estimated average monthly mercury needs as:
N = 500 + 10X
where N = monthly mercury needs (units) and X = time period in months (January 2008= 0). The following monthly seasonal adjustment factors have been estimated using data from the past five years:
Month
Adjustment Factor
January
15%
April
10%
July
20%
September
5%
December
10%
(a)
Forecast Accuweather's mercury needs for January, April, July, September, and December of 2010. (1)
(b)
The following actual and forecast values of mercury needs in the month of November have been recorded:
Year
Actual
Forecast
2008
456
480
2009
324
360
2007
240
240
What seasonal adjustment factor should the firm use for November? (1)
2. The variation in an economic time-series which is caused by major expansions or contractions usually (1) of greater than a year in duration is known as:
a.
secular trend
b.
cyclical variation
c.
seasonal effect
d.
unpredictable random factor
e.
none of the above
3. Examine the plot of data. (1) Sales
Time
It is likely that the best forecasting method for this plot would be:
a. a two-period moving average
b. a secular trend upward
c. a seasonal pattern that can be modeled using dummy variables or seasonal adjustments
d. a semi-log regression model
e. a cubic functional form
4. Emma uses a linear model to forecast quarterly same-store sales at the local Garden Center. The results of her multiple regression is: (1 point)
Sales = 2,800 + 200•T - 350•D
where T goes from 1 to 16 for each quarter of the year from the first quarter of 2006 (‘06I) through the fourth quarter of 2009 (‘09 IV). D is a dummy variable which is 1 if sales are in the cold and dreary first quarter, and zero
1. The Accuweather Corporation manufactures barometers and thermometers for weather forecasters. In an attempt to forecast its future needs for mercury, Accuweather's chief economist estimated average monthly mercury needs as:
N = 500 + 10X
where N = monthly mercury needs (units) and X = time period in months (January 2008= 0). The following monthly seasonal adjustment factors have been estimated using data from the past five years:
Month
Adjustment Factor
January
15%
April
10%
July
20%
September
5%
December
10%
(a)
Forecast Accuweather's mercury needs for January, April, July, September, and December of 2010. (1)
(b)
The following actual and forecast values of mercury needs in the month of November have been recorded:
Year
Actual
Forecast
2008
456
480
2009
324
360
2007
240
240
What seasonal adjustment factor should the firm use for November? (1)
2. The variation in an economic time-series which is caused by major expansions or contractions usually (1) of greater than a year in duration is known as:
a.
secular trend
b.
cyclical variation
c.
seasonal effect
d.
unpredictable random factor
e.
none of the above
3. Examine the plot of data. (1) Sales
Time
It is likely that the best forecasting method for this plot would be:
a. a two-period moving average
b. a secular trend upward
c. a seasonal pattern that can be modeled using dummy variables or seasonal adjustments
d. a semi-log regression model
e. a cubic functional form
4. Emma uses a linear model to forecast quarterly same-store sales at the local Garden Center. The results of her multiple regression is: (1 point)
Sales = 2,800 + 200•T - 350•D
where T goes from 1 to 16 for each quarter of the year from the first quarter of 2006 (‘06I) through the fourth quarter of 2009 (‘09 IV). D is a dummy variable which is 1 if sales are in the cold and dreary first quarter, and zero