The file P12_12.xlsx contains five years of monthly data on sales (number of units sold) for a particular company. The company suspects that except for random noise, its sales are growing by a constant percentage each month and will continue to do so for at least the near future.
a. Explain briefly whether the plot of the series visually supports the company’s suspicion.
b. Fit the appropriate regression model to the data. Report the resulting equation and state explicitly what it says about the percentage growth per month.
c. What are the RMSE and MAPE for the forecast model in part b? In words, what do they measure? Considering their magnitudes, does the model seem to be doing a good job?
d. In words, how does the model make forecasts for future months? Specifically, given the forecast value for the last month in the data set, what simple arithmetic could you use to obtain forecasts for the next few months?