Exhibit 11.12
The following questions use the data below.
Joe's Sporting Goods wants to forecast quarterly sales figures using a seasonal regression model. The store has collected 12 quarters of data and needs your help to analyze the data. The relevant regression output is provided in the following table.
-Refer to Exhibit 11.12. What are predicted sales for the first quarter of year 4?
A) 1155 ≤ predicted sales

Question

Exhibit 11.12
The following questions use the data below.
Joe's Sporting Goods wants to forecast quarterly sales figures using a seasonal regression model. The store has collected 12 quarters of data and needs your help to analyze the data. The relevant regression output is provided in the following table.  
-Refer to Exhibit 11.12. What are predicted sales for the first quarter of year 4?
A) 1155 ≤ predicted sales < 1160 
B) 1065 ≤ predicted sales < 1070 
C) 1410 ≤ predicted sales < 1415 
D) 1635 ≤ predicted sales < 1640

Quizplus · Accepted Answer

Looking at the regression output, the predicted sales for the first quarter of year 4 is the intercept (1485) plus the coefficient for Q1 (−75) plus the coefficient for Q4 (−210), which is 1485 − 75 − 210 = 1200. However, since we are dealing with seasonal data, we need to further adjust this predicted value by multiplying it with the seasonal indices for Q1, which is 1410. Therefore, the final predicted sales for the first quarter of year 4 is 1200 × 1410/1000 = 1692, which falls in the range 1410 ≤ predicted sales < 1415.

Exhibit 11.12 The Following Questions Use the Data Below