1. DRQ # November 10, 2011 (4pts)
Suppose that liquor sales is estimated using a seasonal model given by:
Liquor Sales = *FALL + 5*SPRING – 2*SUMMER,
where Fall, Spring, and Summer are dummy variables. Winter is the base season.
(0.5pt) (a) Our forecast for liquor sales in the winter is __________ ?
(0.5pt) (b) Our forecast for liquor sales in the spring is __________ ?
(2.0pts) (c) Suppose now that the base season is the Summer. What are the new coefficient values in the regression,
Liquor Sales = b0 + b1FALL + b2SPRING + b3WINTER + et?
2. Suppose the total sales for a local grocery store from Monday to Friday are given as:
Day Monday Tuesday Wednesday Thursday Friday
Amount $90, $95, $98, $100,000 $105,000
(0.5pt) (a) Give the general model representation of a MA(2) process.
(0.5pt) (b) Calculate the MA(2) prediction sales for Thursday.