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Generating Forecast

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The following time series data represent the quarterly amounts spent on advertising (in millions of dollars) by a large toy company (read across):

This series of data begins in Quarter 1of 1993 (i.e., time period t =1 corresponds to the first quarter of 1993). Using regression analysis, a linear trend line of the form Ttwas = 21.08 + 0.34t fit to the data. Using this information, generate a forecast for the total yearly amount of money that will be spent on advertising in 2005.
Quarter 1 Quarter 2 Quarter 3 Quarter 4
24.4 21.1 23.2 21.5
21.0 20.7 21.2 23.8
21.9 22.8 29.0 25.7
26.3 29.8 26.5 26.4
30.6 26.1 24.5 27.7
31.6 27.3 25.3 29.0
28.6 33.8 27.9 32.4
27.8 33.4 28.0 29.2
36.0 33.3 29.5 37.0

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Solution Summary

The solution generates a forecast based on the data given. Overall, an excellent response.

Solution Preview

The regression equation is Tt=21.08 +0.34t

For 2005 the value of t will be:

Quarter 1: ...

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