The annual sales for a company follow the AR(2) model X, = 5+1.1X-1-0.5.X-2+ with o² = 2.(a) If sales for 2012, 2011, 2010 were 10 units, 11 units, and 9 units, respectively, forecast salesfor 2013 and 2014.Also, calculate the variance of the errors in these forecasts, and 95% prediction intervals.(b) Suppose the 2013 sales turn out to be 12 units. Calculate the updated forecast for 2014 andcompare it (and the variance of the error in the forecast) to the forecast value in part (a) above.

Given the AR(2) model for the annual sales of a company as Xt=5+1.1Xt-1-0.5Xt-2+εt with σε2=2

Answered: The annual sales for a company follow…

Linear Algebra: A Modern Introduction

4th Edition

ISBN:9781285463247

Author:David Poole

Publisher:David Poole

Chapter4: Eigenvalues And Eigenvectors

Section4.6: Applications And The Perron-frobenius Theorem

Problem 25EQ

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