The sales at a retail store has shown to fluctuate over the different quarters o

Question

The sales at a retail store has shown to fluctuate over the different quarters of the year. To predict sales, the following regression model has been fitted to past data in which the variables “summer”, “fall” and “winter” are dummy variables representing which season each quarter belongs to:

Sales = 27.5 + 0.85 * # of quarters + 0.3 * summer + 0.1 * fall – 0.5 * winter.

Which of the following represents the forecast for quarter 25, which coincides with a “spring” season?

Select one:

a. 27.5

b. 48.75

c. 48.65

d. 28.25

e. 46.25

Explanation / Answer

Sales = 27.5 + 0.85 * # of quarters + 0.3 * summer + 0.1 * fall – 0.5 * winter.

for spring, Sales = 27.5 + 0.85*25=48.75 answer B

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