You are told that the number of sales per month for a store follows an AR(1)

process of the form

where et is normally distributed with zero mean and constant variance. Say x₃₀ = 1,000, x₃₁= 1,125, and x₃₂ = 1,227. Forecast sales for the following time periods:

(a) x₃₃, x₃₄, and x₃₅ at t = 31

(b) x₃₄ and x₃₅ at t = 30

Transcribed Image Text:

x = 125 +.6x-1 +