Chap 014

Chapter 14 - Time-Series Analysis
Chapter 14
Time-Series Analysis
Note:For questions that deal with “best model” the student should consider four criteria:
 Occam’s Razor Would a simpler model suffice?
 Overall fit How does the trend fit the past data?
 Believability Does the extrapolated trend “look right?”
 Fit to recent data Does the fitted trend match the last few data points
14.1 a. See graphs.

b. Increased bird strikes might be explained by an increase in the number of flights and
more aircraft in the skies.
c. See graphs.
d. Linear model is simple and has a good fit. Both quadratic and exponential model appear
to increase rapidly in future year.
e. As expected both the exponential and quadratic models forecast much higher than the
linear model. The linear model seems to fit the past data and the trend much more
closely than the other two models.
t Linear Exponential Quadratic

19 7,877 9,284 8,146
20 8,239 10,144 8,593
21 8,600 11,084 9,048
14-1
Learning Objective: 14-2

14.2 a. Fairly linear increase

b. A growing interest in organic produce and willingness to pay for the produce plus the
desire by consumers for certification
c. See graphs below showing the linear, quadratic, and exponential models
d. It appears that the quadratic model is capturing the growth in organic farming the best;
although the model should be adjusted after three years.
e.
Exponentia Quadrati
t Linear l c
9 12654.8 12994.4 14692.5
10 13450.8 14140.1 16847.0
11 14246.8 15386.9 19273.2
14-2
Notice that the quadratic model has much higher forecasts than either the linear or the
exponential models. It would be prudent to research what is actually driving this growth to
determine if the quadratic model reflects a continuing trend.
14-3

14-4
14.3 a. Sharp decline from 2000 to 2002 and then a leveling off with noise.
b. Erosion of unskilled jobs, globalization, tougher bargaining.
d. The linear model predicts negative strikes by 2008. The quadratic model has the highest
R2 starts to rise after 2008.The exponential model appears to be the best fit of the three.
The best forecast might be the average number from 2002 to 2010.
e.
Exponentia
t Linear Quadratic l
12 12.07 74.57 33.25
13 -6.04 87.70 28.31
14 -24.15 105.64 24.10
14-5

14.4 a. The line plot shows a noticeable decreasing trend from 2003 to 2009. See graphs below.
b. There has been a decrease in car dealerships in the U.S. since 2003 due to various factors
such as lower car sales due to increasing gas prices. There may have been consolidation
of smaller dealerships into large dealerships which could also account for the decrease
in the number of dealerships.
d. The quadratic fit has the best R2 and seems to provide a sensible fit.
Exponentia
t Linear Quadratic l
8 18829.7 17074.7 18776.8
9 18331.6 15260.4 18313.2
10 17833.6 13153.6 17861.0
14-6

14.5 a. The trend is increasing up until 2000 and then it starts to decline.
b. Rise of health care concerns, change to healthy diet.

c. yt = 596.8 + 19.95t, R2 = .867.
d. No longer need to increase capacity based on change from 2000 to 2005.
e. Using t = 7 we get y7 = 736.45. This forecast may be too high.
14-7

14.6 a. See graphs. A cyclical pattern is observed (positive autocorrelation).

b. As m increases (i.e., more smoothing) the trendline does not describe the data as well.m
= 2 gives the best “fit” while m = 6 gives the most smoothing. A larger m is actually
helpful if we are trying to reduce the impact of day-to-day fluctuations (if you want to
track the data exactly, why smooth at all).
c. Can help anticipate the next day’s rate. Trend models aren’t much help.
14-8
14.7 a. Yields seem to exhibit a cyclical pattern that is not like any standard trend model (looks
like positive autocorrelation) so exponential smoothing seems like a good choice for
making a one-period-ahead forecast.
b-f.MegaStat output is lengthy. Here is a summary table:

 = .10  = .20  = .30
Mean Squared Error 0.039 0.028 0.021
Mean Absolute Percent Error 3.8% 3.1% 2.7%
Percent Positive Errors 42.3% 46.2% 51.9%
Forecast for Period 53 4.3 4.37 4.43

14-9
14.8 a. Seasonality is present as well as a positive trend.
Calculation of Seasonal
Indexes
1 2 3 4
2004 0.996 1.201
2005 0.836 0.983 1.017 1.161
2006 0.797 0.998 1.018 1.201
2007 0.787 1.017 1.041 1.184
2008 0.773 0.986 1.012 1.145
2009 0.738 1.068
mean: 0.786 1.011 1.017 1.178 3.992
adjusted: 0.788 1.013 1.019 1.181 4.000
14-10
b. Time and seasonal binaries are significant.

Regression Analysis
R² 0.860
Adjusted R² 0.831 n 24
R 0.928 k 4
Std. Error 1171.700 Dep. Var. Revenue
ANOVA
table
Source SS df MS F p-value
160,850,280.033
Regression 3 4 40,212,570.0083 29.29 6.87E-08
Residual 26,084,750.5917 19 1,372,881.6101
186,935,030.625
Total 0 23
Regression output confidence interval

variables coefficients std. error t (df=19) p-value 95% lower 95% upper
Intercept 8,973.3083 684.8853 13.102 5.80E-11 7,539.8269 10,406.7898
Time Index 275.7875 35.0112 7.877 2.11E-07 202.5081 349.0669
QTR1 -4,156.4708 684.5869 -6.072 7.72E-06 -5,589.3278 -2,723.6139
QTR2 -1,909.2583 680.0958 -2.807 .0112 -3,332.7153 -485.8014
QTR3 -1,701.3792 677.3869 -2.512 .0212 -3,119.1662 -283.5921
c. Forecasts for 2011:
Period Forecasts
2011 Q1 $11,711.525 million
2011 Q2 $14,234.525 million
2011 Q3 $14,718.192 million
2011 Q4 $16,695.358 million

14-11
14.9 a. No trend present, but there is seasonality. It is important to emphasize that 1.00 is the
key reference point for a multiplicative seasonal index. The creative student might plot
the seasonal indexes. A chart can show that March, April, Mayappear to be
significantly above average (seasonal index exceeding 1.00). MegaStat’s trend fitted to
deseasonalized data (shown below) shows virtually no trend (R2 = .0006).
Calculation of Seasonal Indexes
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2004 1.198 0.716 1.280 0.898 0.734 1.022
2005 0.874 0.888 1.230 1.234 1.169 0.898 0.689 0.800 0.847 1.052 1.105 1.133
2006 0.875 1.013 1.186 1.134 1.079 0.963 0.922 0.996 1.029 0.940 0.948 1.052
2007 0.766 0.962 1.096 1.128 1.164 1.086
mean: 0.838 0.954 1.171 1.165 1.137 0.982 0.937 0.837 1.052 0.963 0.929 1.069
adjusted: 0.836 0.951 1.167 1.162 1.134 0.979 0.934 0.835 1.049 0.961 0.926 1.066
14-12
b. Fit of the multiple regression model is not very good (R2 = .416, R2adj = .216) and no
predictors are significant at  = .05.
Regression Analysis
R² 0.416
R 0.645 k 12
Std. Error 389.888 Dep. Var. Corvette Sales
ANOVA
table
3,791,194.066
Regression 7 12 315,932.8389 2.08 .0459
5,320,448.600
Residual 0 35 152,012.8171
9,111,642.666
Total 7 47

Intercept 3,056.2500 232.0299 13.172 3.99E-15 2,585.2043 3,527.2957
Time Index -0.5167 4.1945 -0.123 .9027 -9.0320 7.9987
Jan -501.1833 279.5269 -1.793 .0816 -1,068.6531 66.2865
Feb -398.6667 278.8652 -1.430 .1617 -964.7932 167.4598
March 219.8500 278.2652 0.790 .4348 -345.0584 784.7584
April 227.3667 277.7273 0.819 .4185 -336.4496 791.1830
May 234.3833 277.2517 0.845 .4036 -328.4676 797.2343
June -91.8500 276.8389 -0.332 .7420 -653.8629 470.1629
July -409.5833 276.4892 -1.481 .1475 -970.8862 151.7195
Aug -508.8167 276.2027 -1.842 .0739 -1,069.5379 51.9046
Sept -49.8000 275.9796 -0.180 .8578 -610.0684 510.4684
Oct -333.5333 275.8202 -1.209 .2347 -893.4781 226.4114
Nov -419.2667 275.7245 -1.521 .1373 -979.0172 140.4838
c. Forecasts for 2008 are shown. These forecasts involve plugging the correct binary
value (0, 1) for each month into the fitted regression equation. It is simpler than it
seems at first glance, because all binaries are zero except the month being forecast.
Period Forecast Period Forecast

January 2,529.8 July 2,618.3
February 2,631.8 August 2,518.5
March 3,249.8 September 2,977.0
April 3,256.8 October 2,692.8
May 3,263.3 November 2,606.5
June 2,936.5 December 3,025.3

14-13
14.10 a. See graphs in part c below.

b. We see a positive upward trend. JetBlue was a new airline in 2002. As air travel
becomes more and more common, air travelers are looking for more options. JetBlue
has been successful using a customer-focused strategy.
c.
d. The linear trend appears to be the better model for forecasting future revenue. The R2 is
greater (.9683) and the exponential model would appear to forecast greater revenue
than the historical trend would indicate.
e.
Exponentia
t Linear l
9 4,337.3 5,350.9
10 4,755.9 6,501.1
11 5,174.4 7,898.4

14-14
14.11 a. Dual scale graph is helpful, due to differing magnitudes. (After creating a line chart it is
possible to create a secondary scale by clicking on one of the data series and choosing
to format the data series. You can then choose a secondary axis.)
b. Electronic sales are much higher than mechanical but the trends for the two types of
watches are the same. Sales have been fairly steady over the past six years with a dip in
2009. 2009 most likely shows a drop due to the recession.
c. Electronic Watch Sales: ŷ = 21,668e−.013t, R2 = .105. Mechanical Watch Sales: ŷ =
3320.6e.055t, R2 = .581.
d. Watches seem to be a stable product with an explainable dip in sales in 2009. The
exponential trend would not be appropriate for level product sales. Either a moving
average or exponential smoothing would actually make more sense.
e.
Mechanica
t l Electronic
7 4,844.1 19,938.2
8 5,069.6 19,696.8
9 5,295.1 19,455.4

14-15
14-16
14.12 a.
b. Trend is positive. People have more leisure time and use it watching the tube.
c. Linear: ŷ = 18.97t + 255.42 (R2 = .98)
d. The linear trend should give good results based on fit to recent data.
e. t = 14 for 2015. ŷ 14 = 521 minutes or 8 hours and 41 minutes.
f. Yes, hours in a day are finite (24 hours) and people also must work and sleep.
14.13 a. See graph in part c below.

b. The trend appears to be decreasing. This could be a consequence ofan increase in the
population. Although percentage of voters has decreased, the total number voting has
increased. Also, there are many ways for citizens to express opinions other than through
voting. Certainly one might hypothesize that voter apathy was on the rise during the
80’s and early 90’s. Note the slight increase in voter participation since the late 90’s
c.
14-17
d. Both forecasting models predict a drop in voter turnout which does not seem consistent
with the increase over the last 10 years.
e.
t Linear Quadratic
16 50.40 55.58

14.14 a. ŷ =2286e0.076(7) = 3891.5

b. ŷ = 1149 + 12.78(7) = 1238.5
c. ŷ = 501 +18.2(7) – 7.1(72) = 280.5
14.15 a.
b. All three are increasing steadily. The linear growth until 2008 is possibly due to
convenience of credit and marketing to higher risk groups. Notice the drop since 2008,
particularly revolving credit which typically has higher interest rates than non-
revolving.
c. Linear trend for each category: Total ŷ t = 77.23t + 1762.5 (R² = .854) Non-revolving ŷ t
= 57.29t + 1065.3 (R² = .921) Revolving ŷ t = 20.04t + 696.15 (R² = .577)
d. Forecasts for 2011, 2012 and 2013 in $ billions.
t Total Revolving Non-revolving
12 2689.26 936.63 1753.28
13 2766.49 956.67 1810.57
14 2843.72 976.71 1867.36

14-18
14.16 a.
b. Answers will vary. Airplanes are capital goods, affected by business cycles (stronger
demand expected during periods of growth), interest rates (credit availability for
financing), and foreign demand (exchange rates, economic conditions abroad, foreign
competition). There appears to be a major change in the industry after 1979.
c. No fitted trend can capture the whole pattern of aircraft sales.
d Even this subset of the data has a problematic downturn that all of the standard trend
models will miss. This may be related to the 2001 attack on the U.S. World Trade
Center.
e. Exponential trend is yt = 990.59e0.083t (R2 = .789). Quadratic trend is yt = −7.0473t2 +

274.2t + 506.21 (R2 = .843).
f. Exponential forecast for 2009 is y17 = 990.59e0.083(17) = 4,061. This forecast is
aggressive, considering the recent past. Quadratic forecast for 2009 is 3,131. A
judgment forecast might be better, using the most recent data, e.g., y16≈3,000.
14-19
14.17 a. Graph below shows only the three major beverage categories: milk, fruit juices, and
alcohol.
b. Milk shows a decrease over time, fruit juices show a slight increase, and alcohol shows
an obvious drop in 1995 with a leveling off. Tastes in beverages are influenced by
prices, fads, perceived health benefits, calories, changing age demographics,
advertising, and many other factors that students will think of.
c. A fitted trend would be helpful with milk however the other categories appear to be
level. Beverage consumption could be influenced by advertising so a causal forecasting
model might be a better approach than a time series model.
d. Linear trend models shown in graph below.
14-20
Exponential trend models shown in graph below.
The trend models fit best for milk which shows a clear decreasing trend. The models fit
OK for fruit juice and alcohol.
e. Linear trend forecasts:
t Milk Fruit Juices Alcohol

7 19.83 8.69 23.67
8 18.47 8.88 22.88
Exponential trend forecasts:
t Milk Fruit Juices Alcohol

7 20.09 8.71 23.73
8 18.99 8.92 23.03

14-21
14.18 a. See graphs below.
b. Three of the four time series show an increasing trend. Receipts show an obvious
decrease from 2008 to 2009 with a leveling off the past two years. Federal taxes and
spending are political variables that are affected by societal needs, the balance of
political power in Congress, and leadership from the executive branch. Economic
growth, inflation, business cycles, and economic policies underlie changes in the GDP
and federal debt.
c. Exponential: Outlays yˆ t = 1629.2e0.07t (R² = .988),Receipts yˆ t = 1885e0.0182t (R² = .309),
Federal Debt yˆt = 4729.7e0.0907t(R² = .970), GDP yˆ t = 9509.0e0.0414t (R² = .961)
d. Outlays were growing faster than receipts leading to a rising deficit. Federal debt was
growing faster than the GDP over this entire period.
e. Relevant groups are Congress, Federal Reserve, President, businesses, households.
14-22
14.19 a. Both have slight downward trends.
b. There is not a significant linear trend to this data. The linear model for each series
shows low R2 values (R2 = .096 for Men and R2 = .181 for Women.) Based on historical
data, it is unlikely that the winning times will converge. Using the linear model to
forecast out 20 years, one would see that the women’s winning times are still
significantly higher than the men’s.
c. Moving average gives a good fit. The dark black line on each series shows a 3 period
moving average.
d. Yes, a moving average makes more sense here because there is no significant trend over
the last 20-30 years.
14-23
14.20 a.
b. A positive linear trend is seen.

c. Linear: yˆ t = 227t + 11024 (R² = .964), Exponential: yˆ t = 11073e0.018t (R² = .968). Both
will fit well.
d. Linear forecast for 2008: 13,521.
14.21 a.
b. We see an increase from 1999 to 2001 and then a drop back to the average. There is no
increasing or decreasing trend other than this change.
c. A fitted trend is not helpful if no trend exists.
d. Using a judgment forecast, one might predict approximately 128 deaths in 2009. This is
the average with the year 2001 removed.
14-24
14.22 a. See graph in part c below.

b. Decreasing trend in deaths due to lightning.
c.
d. Based on the exponential model the forecast for 2015 would be approximately 30
deaths.
14.23 a.
b. A trend might be helpful. The graph above shows an increase over the last 10 seasons.
c. Forecast for 2007-2008 season: ŷ24 = 0.2685(24) + 50.489 = 56.933 million visits.
14-25
14.24 a.
b. Men: yˆ t = 0.0693t + 11.895, women: yˆt = 0.0419t + 10.541.

c. Yes it seems the times might converge but it will be beyond 2040. See graph below.
d. Set 0.0693t + 11.895 = 0.0419t + 10.541and solve for t. t = 49.42 (round up to 50).
Time period50 is the year 2132. The rate at which both men and women are improving
their race times is slowing down. It will take many years for the times to converge if
they continue this way.
14-26
14.25 a.
b. We see an overall increasing trend in imports. Fuel consumption has risen steadily and
is the subject of much debate today.
c. Linear: yˆ t = 441.59t + 39.667 (R2 = .9188), Exponential: yˆt = 667.17e0.2067t (R2 = .
9108). The linear trend will forecast a steady increase in imports whereas the
exponential trend will forecast an ever increasing growth in both the quantity of imports
and the rate of import growth.
d. Exponential forecast for 2010: 6482 billion barrels. Linear forecast is much lower at
4897 billion barrels.
e. This issue is relevant to all of society.
14.26a. See graph.

b. Answers will vary. Students will see that m=2 (shown below) gives the best “fit.”
However, m = 2 offers little smoothing. Being heavily influenced by the most recent
data values could be a disadvantage in making a future projection.
c. Yes., based on overall fit, fit to recent data, and the inapplicability of any of the usual
trend models.
14-27
14.27 a. See graphs.

b. See graphs. The degree of smoothing varies dramatically as  is increased.
c. For this data  = .20 seems to track the recent data well, yet provides enough
smoothing to iron out the “blips.” It gives enough weight to recent data to bring its
forecasts above 1.80 (lagging but reflecting the recent rise in rates). In contrast,  = .05
or  = .10 are not responsive to recent data (too much smoothing) so they give a
forecast below 1.80. While  = .50 gives a good “fit” it does not smooth the data very
much. Forecasters generally use smaller  values (the default of  = .20 is a common
choice).
d. Yes, based on graphs and fitted trendline.
 = .05  = .10
 = .20  = .50
14.28 a. See graph.

b. Yes. Seasonality is quite apparent. There are highs and lows, depending on the month.
There is also an upward trend. The seasonal swings seem to increase in amplitude.
c. See output below. It is important to note that 1.00 is the key reference point for a
multiplicative seasonal index. The creative student might plot the seasonal indexes to
show that Nov through Mar (the winter months) are above 1.00, Apr is near 1.00, and
the summer and fall months are below 1.00.
d. December is the highest, August is the lowest. This is logical, based on the seasons’
impact on heating degree-days (presumably the residence is in a northern climate).
e. There is some upward trend. Logical, since generally, fossil fuels are getting more
expensive.
14-28
f. We used December as our norm. January and February binaries are not significant
meaning that these two months are not significantly different from December. All other
binaries are significant and negativemeaning that December, January, and February are
the highest months.
Regression Analysis
R² 0.856
R 0.925 k 12
Std. Error 19.453 Dep. Var. Bills
ANOVA
table
Regression 78,693.0817 12 6,557.7568 17.33 2.70E-11
Residual 13,244.5909 35 378.4169
Total 91,937.6726 47
Intercept 110.6567 11.5768 9.558 2.73E-11 87.1545 134.1589
Time Index 0.7482 0.2093 3.575 .0010 0.3233 1.1731
Jan -11.2099 13.9466 -0.804 .4270 -39.5230 17.1033
Feb -8.9406 13.9136 -0.643 .5247 -37.1867 19.3056
Mar -37.4263 13.8837 -2.696 .0107 -65.6116 -9.2409
Apr -56.6644 13.8568 -4.089 .0002 -84.7953 -28.5336
May -90.3026 13.8331 -6.528 1.57E-07 -118.3853 -62.2200
Jun -108.6883 13.8125 -7.869 3.00E-09 -136.7292 -80.6475
Jul -93.1165 13.7950 -6.750 8.05E-08 -121.1220 -65.1111
Aug -111.1022 13.7808 -8.062 1.72E-09 -139.0786 -83.1258
Sep -105.7554 13.7696 -7.680 5.17E-09 -133.7092 -77.8016
Oct -75.9086 13.7617 -5.516 3.36E-06 -103.8463 -47.9709
14-29
Nov -38.0693 13.7569 -2.767 .0090 -65.9973 -10.1413

14.29 a.
b. Yes, it appears that delays increase from January to July and then decrease towards the
end of each year. There is an overall increasing trend as well.
c. From MegaStat:
Monthly Seasonal
Index
Jan 0.798
Feb 0.794
March 0.984
April 0.806
May 1.076
June 1.247
July 1.363
Aug 1.242
Sept 0.935
Oct 0.925
Nov 0.930
Dec 0.901
14-30
d. It appears that the summer months have the most delays and the winter months have the
fewest. Many more people travel over the summer than during the winter so this does
make sense.
e. Yes, there is a trend in the deseasonalized data. See graph above.
14.30 a.
b. It is difficult to see a seasonal pattern if there is one. There has been an increasing trend
in shipments from 1995 to 2000 followed by a slight decrease.
14-31
c. See output and graph. Yes, there is an upward trend prior to 2002. The seasonal indexes
indicate below average shipments in the first and third quarters and above average
shipments in the second and fourth quarters.

1 2 3 4
1995 0.990 1.181
1996 0.855 1.076 0.864 1.124
1997 0.844 0.981 0.920 1.177
1998 0.987 0.936 1.028 1.095
1999 0.876 1.031 0.979 1.089
2000 0.920 1.039 1.018 1.066
2001 0.865 1.112 0.947 1.148
2002 0.790 1.054 0.951 1.224
2003 0.763 1.016
mean: 0.863 1.031 0.962 1.138 3.993
adjusted: 0.864 1.032 0.964 1.140 4.000
14-32
14.31 a.
b. See output and graph. There is an upward trend in the deseasonalized data until 2008
followed by a decrease.This is logical, given consumers’ dependence on credit until the
recession hit.
1 2 3 4 5 6 7 8 9 10 11 12
2005 0.990 0.997 0.997 0.995 1.008 1.033
2006 1.014 0.999 0.985 0.989 0.994 0.990 0.989 0.997 0.996 0.995 1.010 1.033
2007 1.010 0.994 0.985 0.985 0.990 0.991 0.991 0.999 0.997 1.001 1.013 1.035
2008 1.017 1.002 0.991 0.992 0.992 0.996 1.001 1.010 1.010 1.009 1.018 1.037
2009 1.022 1.000 0.985 0.986 0.986 0.989 0.997 1.004 1.003 1.005 1.011 1.031
2010 1.010 0.991 0.979 0.978 0.985 0.990
mean: 1.015 0.997 0.985 0.986 0.989 0.991 0.994 1.001 1.001 1.001 1.012 1.034
adjusted: 1.014 0.997 0.985 0.986 0.989 0.991 0.993 1.001 1.000 1.001 1.011 1.033
14-33
c. Highest: August through January are the highest borrowing months. Yes this is logical.
Credit increases due to the start of the new school year followed by the Christmas
buying season.
d. The difficulty of finding a forecasting model to describe this time period is that a
recession hit our economy in 2008 resulting in a decrease in borrowing. The trend in
borrowing will change when national events such a recession occur.
14.32 a. From MegaStat, the seasonal indexes are shown below as well as the deseasonalized
data. The seasonal influence is not strong but is consistent. The graph shows slightly
higher than average sales in the second and third quarters and lower than average sales
in the first and fourth quarters.
Calculation of Seasonal
Indexes
1 2 3 4
1005 1.045 0.957
1006 0.890 1.084 1.053 0.927
1007 0.910 1.099 1.043 0.952
1008 0.928 1.129 1.054 0.909
1009 0.932 1.074 1.032 0.952
1010 0.942 1.032
mean: 0.920 1.083 1.045 0.940
adjusted: 0.923 1.087 1.048 0.942
14-34
b. Regression Analysis using quarterly binaries. Quarter 2 would be considered

significantly different from quarter 4 if α = .05 (p-value = .0609 < .10).
Regression Analysis
R² 0.805
R 0.897 k 4
Std. Error 628.372 Dep. Var. Revenue
ANOVA
table
31,045,224.061
Regression 9 4 7,761,306.0155 19.66 1.53E-06
Residual 7,502,180.4381 19 394,851.6020
38,547,404.500
Total 0 23
Intercept 5,227.3000 367.2977 14.232 1.38E-11 4,458.5370 5,996.0630
Time Index 149.7643 18.7762 7.976 1.75E-07 110.4652 189.0633
QTR1 -440.0405 367.1377 -1.199 .2454 -1,208.4686 328.3876
QTR2 726.5286 364.7292 1.992 .0609 -36.8584 1,489.9155
QTR3 333.0976 363.2764 0.917 .3707 -427.2486 1,093.4439
14-35
c. The predictions for 2011 are:
Predicted values for: Revenue

95% Confidence Intervals 95% Prediction Intervals
Predicte
Time Index QTR1 QTR2 QTR3 d lower upper lower upper
8,531.36 7,007.96 10,054.76
25 1 0 0 7 7,762.604 9,300.130 8 5
9,847.70 10,616.46 8,324.30 11,371.09
26 0 1 0 0 9,078.937 3 2 8
9,604.03 10,372.79 8,080.63 11,127.43
27 0 0 1 3 8,835.270 6 5 2
9,420.70 10,189.46 7,897.30 10,944.09
28 0 0 0 0 8,651.937 3 2 8

14.33 a. Using December as the base month the output below shows that all months are
significantly different from December at α = .01. November is significantly different
from December at α = .05. The time index is not significant which indicates there is no
decreasing or increasing trend to the data. This is also confirmed when looking at the
line chart below the MegaStat output.
From MegaStat:
Regression Analysis
R² 0.754
R 0.869 k 12
Std. Error 525.514 Dep. Var. Student Pilot Certificates
ANOVA
table
50,021,989.138
Regression 1 12 4,168,499.0948 15.09 8.06E-14
16,293,750.736
Residual 9 59 276,165.2667
66,315,739.875
Total 0 71
Intercept 3,229.4250 249.2733 12.955 6.67E-19 2,730.6303 3,728.2197
Time Index 2.1685 3.0220 0.718 .4759 -3.8785 8.2154
Jan 1,523.5196 305.2214 4.992 5.62E-06 912.7730 2,134.2663
Feb 1,016.5179 304.9071 3.334 .0015 406.4002 1,626.6355
Mar 1,536.6827 304.6224 5.045 4.63E-06 927.1347 2,146.2308
Apr 1,380.5143 304.3675 4.536 2.87E-05 771.4764 1,989.5522
May 1,816.1792 304.1424 5.971 1.44E-07 1,207.5917 2,424.7666
Jun 2,464.5107 303.9471 8.108 3.59E-11 1,856.3139 3,072.7075
Jul 2,587.0089 303.7818 8.516 7.38E-12 1,979.1429 3,194.8750
14-36
Aug 3,194.6738 303.6465 10.521 3.71E-15 2,587.0785 3,802.2691

Sep 2,027.8387 303.5412 6.681 9.37E-09 1,420.4541 2,635.2233
Oct 1,498.8369 303.4660 4.939 6.80E-06 891.6028 2,106.0710
Nov 652.3351 303.4209 2.150 .0357 45.1914 1,259.4789
b. Monthly forecasts for 2010:

Mont Predict
h ed
Jan 4,911.2
Feb 4,406.4
Mar 4,928.7
Apr 4,774.7
May 5,212.6
Jun 5,863.1
Jul 5,987.7
Aug 6,597.6
Sep 5,432.9
Oct 4,906.1
Nov 4,061.7
Dec 3,411.6
14-37

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Chapter 14 - Time-Series Analysis

14.1 a. See graphs.

t Linear Exponential Quadratic

Learning Objective: 14-2

14.2 a. Fairly linear increase

Learning Objective: 14-2

Learning Objective: 14-2

Learning Objective: 14-2

b. Rise of health care concerns, change to healthy diet.

Learning Objective: 14-2

14.6 a. See graphs. A cyclical pattern is observed (positive autocorrelation).

Learning Objective: 14-5

b-f.MegaStat output is lengthy. Here is a summary table:

Learning Objective: 14-4

14.8 a. Seasonality is present as well as a positive trend.

b. Time and seasonal binaries are significant.

Regression output confidence interval

c. Forecasts for 2011:

Learning Objective: 14-7

Regression output confidence interval

Period Forecast Period Forecast

Learning Objective: 14-7

14.10 a. See graphs in part c below.

Learning Objective: 14-2

Learning Objective: 14-2

14.13 a. See graph in part c below.

Learning Objective: 14-2

14.14 a. ŷ =2286e0.076(7) = 3891.5

Learning Objective: 14-2

e. Exponential trend is yt = 990.59e0.083t (R2 = .789). Quadratic trend is yt = −7.0473t2 +

Exponential trend models shown in graph below.

t Milk Fruit Juices Alcohol

Exponential trend forecasts:

t Milk Fruit Juices Alcohol

Learning Objective: 14-2

14.18 a. See graphs below.

14.19 a. Both have slight downward trends.

b. A positive linear trend is seen.

14.22 a. See graph in part c below.

b. Men: yˆ t = 0.0693t + 11.895, women: yˆt = 0.0419t + 10.541.

14.26a. See graph.

Learning Objective: 14-5

14.27 a. See graphs.

Learning Objective: 14-6

14.28 a. See graph.

Nov -38.0693 13.7569 -2.767 .0090 -65.9973 -10.1413

Calculation of Seasonal Indexes

Learning Objective: 14-7

b. Regression Analysis using quarterly binaries. Quarter 2 would be considered

c. The predictions for 2011 are:

Predicted values for: Revenue

Learning Objective: 14-7

Aug 3,194.6738 303.6465 10.521 3.71E-15 2,587.0785 3,802.2691

b. Monthly forecasts for 2010:

Learning Objective: 14-8

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