Using the data in Table 3, two linear trend lines were developed. The first linear trend line, using quarterly data (16 observations) is y
Using the data in Table 3, two linear trend lines were developed. The first linear trend line, using quarterly data (16 observations) is y = 24.72 +.775589X, with a correlation coefficient of .3508. The second linear trend line, using annual data (4 observations) is y = 109.55 + 6.27998X, with a correlation coefficient of .9889. a) Compute the seasonal factors for each quarter. b) Compute the forecast for Quarter 1 of 1999, using the linear trend line for quarterly data. c) Compute the forecast for Quarter 1 of 1999, using the linear trend line for annual data, incorporating the seasonality. d) Compare the two forecasts for Quarter 1 of 1999 and pick which linear trend model is best. Give two reasons to support your answer. TABLE 3 Quarter Year 1 2 3 4 Total 1995 21.6 26.5 23.4 44.9 116.40 1996 21.1 27.7 22.5 49.3 120.60 1997 25.4 31.8 24.0 48.5 129.70 1998 26.2 30.6 27.4 50.1 134.30
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