1.

T: 1 2 3 4 5

Yt: 7 10 10 14 16

Use simple linear regression analysis to find the parameters for the line that minimizes MSE for this time series.

Y-intercept:

Slope:

MSE:

What is the forecast for t = 6?

2.

Quarter Year1 Year2 Year3

1 5 8 10

2 2 4 8

3 1 4 6

4 3 6 8

Use a multiple regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data.

=

Compute the quarterly forecasts for next year based on the model you developed in part (b).

Year Quarter FT(?)

4 1

4 2

4 3

4 4

Use a multiple regression model to develop an equation to account for trend and seasonal effects in the data. Use the dummy variables you developed in part (b) to capture seasonal effects

=

Compute the quarterly forecasts for next year based on the model you developed in part (d).

Year Quarter Period FT(?)

4 1 13

4 2 13

4 3 13

4 4 13

Is the model you developed in part (b) or the model you developed in part (d) more effective?

Model developed in part (b) Model developed in part (d)

MSE: MSE: