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Suppose that annual sales (in millions of dollars) of the Acme Corporation follow the AR(2) model Y₁ = 5+1.1Yt-1 -0.5Y-2 +et with o² = 2. (a) If sales for 2005, 2006, and 2007 were $9 million, $11 million, and $10 million, respectively, forecast sales for 2008 and 2009.

Suppose that annual sales (in millions of dollars) of the Acme Corporation follow the AR(2) model Y₁ = 5+1.1Yt-1 -0.5Y-2 +et with o² = 2. (a) If sales for 2005, 2006, and 2007 were $9 million, $11 million, and $10 million, respectively, forecast sales for 2008 and 2009.

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
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1. Suppose that annual sales (in millions of dollars) of the Acme Corporation follow the AR(2) model Y₁ = 5 + 1.1YŁ_1 − 0.5Yt_2 + et with o² = 2. (a) If sales for 2005, 2006, and 2007 were $9 million, $11 million, and $10 million, respectively, forecast sales for 2008 and 2009. (b) Show that ₁ = 1.1 for this model. (c) Calculate 95% prediction limits for your forecast in part (a) for 2008. (d) If sales in 2008 turn out to be $12 million, update your forecast for 2009.
Transcribed Image Text:1. Suppose that annual sales (in millions of dollars) of the Acme Corporation follow the AR(2) model Y₁ = 5 + 1.1YŁ_1 − 0.5Yt_2 + et with o² = 2. (a) If sales for 2005, 2006, and 2007 were $9 million, $11 million, and $10 million, respectively, forecast sales for 2008 and 2009. (b) Show that ₁ = 1.1 for this model. (c) Calculate 95% prediction limits for your forecast in part (a) for 2008. (d) If sales in 2008 turn out to be $12 million, update your forecast for 2009.
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