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# Moving Averages for the Time Series

The following data represent revenues in thousands of dollars for a manufacturer of small electric appliances.

a. Calculate the moving averages for this time series.
Moving
Year Quarter Revenues Q Average
1996 1 514 1
1996 2 822 2
1996 3 648 3
1996 4 976 4
1997 1 616 5
1997 2 884 6
1997 3 678 7
1997 4 996 8
1998 1 658 9
1998 2 850 10
1998 3 714 11
1998 4 1052 12

b. Find the seasonal index for each quarter.

Quarter Seasonal index
1
2
3
4

c. From the fourth quarter of 1997 to the first quarter of 1998, revenues declined. What happened on a seasonally adjusted basis?

d. From the first quarter of 1998 to the second quarter of 1998, revenues increased. What happened on a seasonally adjusted basis?

e. The regression equation to predict the long term trend in the seasonally adjusted revenues. Seasonally adjusted revenues = 705.97 + 11.67*Q.

f. Compute the seasonally adjusted forecast for the fourth quarter of 2001.

g. Compute the forecast for the second quarter of 2002.

#### Solution Preview

Please see attachments for full solutions.

Moving Averages:

Year Quarter Revenues Q Moving Average
1996 1 514 1 -
1996 2 822 ...

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