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# find the best prediction model

Resource: Ch. 12-14 of Applied Statistics in Business and Economics
Prepare answers to the following assignments:
Exercise 14.6 - Time Series Analysis
Given the following data on Asian and European Share of U.S. Light Truck Sales(1990-2003):
Year t Percent
1990 1 16.4
1991 2 17.1
1992 3 14.3
1993 4 13.7
1994 5 14.2
1995 6 13.6
1996 7 13.6
1997 8 15.4
1998 9 16.2
1999 10 18.4
2000 11 21.2
2001 12 23.1
2002 13 23.9
2003 14 26.6
Source: Detroit Free Press, November 19, 2003. p.1A.

(a) Plot the market-share data. [Enter the data in Excel, highlight 'percent' column, click Insert menu, choose Line chart, select Line with Markers]
(b) Describe the trend (if any) and discuss possible causes.
(c) Fit three trends (linear, exponential, quadratic/polynomial). [Right click the line chart/line marker, select 'add trendline', default is linear. Check the box 'Display equation on chart'. Repeat the process for other trends after selecting each trend].
(d) Which trend model is best, and why? If none is satisfactory, explain.
(e) Make a forecast for 2004 by using a trend model of your choice or a judgment forecast.

#### Solution Summary

The solution provides detailed explanation how to find out the best prediction model.

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