Question 3 The following ACF plots were produced for raw data of monthly sales of two different variables, A and B. a) Explain which variable is likely to be easier to forecast. b) Explain how your answer to part a) would change if these were residuals of an ARIMA model instead of "raw data of monthly sales". Variable A: 0.15- 0.10 - 0.05 - 0.00 -0.05 - -0.10 - -0.15- 10 15 20 Variable B: 1.00 - 0.75- 0.50- 0.25- 0.00 lag (1M]

Question 3 The following ACF plots were produced for raw data of monthly sales of two different variables, A and B. a) Explain which variable is likely to be easier to forecast. b) Explain how your answer to part a) would change if these were residuals of an ARIMA model instead of "raw data of monthly sales". Variable A: 0.15- 0.10 - 0.05 - 0.00 -0.05 - -0.10 - -0.15- 10 15 20 Variable B: 1.00 - 0.75- 0.50- 0.25- 0.00 lag (1M]

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 7E: The Questor Corporation has experienced the following sales pattern over a 10-year period: Compute...

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The Results below show the output of the following model: ?=?0+?1?1+?2?2+? Coefficient St. Error t-ratio Intercept 10.492 0.6655 15.77 ?1 0.0154 0.1889 0.08 ?2 0.1353 0.1889 0.72 Observations 100 ?2 0.985 Correlation matrix: X1 X2 X1 1 X2 0.950 1 Instructions: a. The above results show that the model has the problem of multicollinearity, what are the indicators of multicollinearity that can be identified from these results? b. What are the solutions to rectify multicollinearity?
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