USE EXCEL

Consider the following quarterly time series.

Quarter Year 1 Year 2 Year 3

1 923 1,112 1,243

2 1,056 1,156 1,301

3 1,124 1,124 1,254

4 992 1,078 1,198

Construct a time series plot. What type of pattern exists in the data?

Use a multiple regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data. Qtr1 = 1 if quarter 1, 0 otherwise; Qtr2 = 1 if quarter 2, 0 otherwise; Qtr3 = 1 if quarter 3, 0 otherwise.

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