Develop the equation for the linear trend component

Reference no: EM131451685

Assignment

1. R&B Beverages, Inc., provides a complete line of beer, wine and soft drink products for distribution through retail outlets in central Iowa. Unit price data for 2003 and 2006 and quantities sold in cases for 2003 follow.

Unit Price($)
Items	2003 Quantity (Cases)	2003	2006
Beer	35,000	16.25	17.50
Wine	5,000	64.00	100.00
Soft Drinks	60,000	7.00	8.00

Compute a weighted aggregate index for the R&B Beverage sales in 2006, with 2003 as the base period.

2. The median sales prices for new single family house for the years 1998-2001 are as follows (Statistical Abstract of the United States, 2002).

Year	Price ($1000s)
1998	152.5
1999	161.0
2000	169.0
2001	175.2

3. The following table reports the percentage of stocks in a typical portfolio in nine quarters from 2005 to 2007.

Quarters	Stock %
1^st-2005	29.8
2^nd -2005	31.0
3^rd-2005	29.9
4^th-2005	30.1
1^st-2006	32.5
2^nd-2006	31.5
3^rd-2006	32.0
4^th-2006	31.9
1^st--2007	30.0

a. Use exponential smoothing to forecast this time series. Consider smoothing constants of a=.2, .3 and .4. What value of the smoothing constant provides the best forecast?

b. What is the forecast of the percentage of stocks in a typical portfolio for the second quarter of 2007?

4. The following five years of data show the average minimum balance to avoid fees for checking the accounts that pay interest (USA Today; December 6,2005).

Date	Balance($)
Spring 2000	1522.41
Fall 2000	1659.63
Spring 2001	1678.34
Fall 2001	1707.55
Spring 2002	1767.36
Fall 2002	1866.17
Spring 2003	2015.04
Fall 2003	2257.82
Spring 2004	2425.83
Fall 2004	2086.93
Spring 2005	2295.85
Fall 2005	2294.61

a. Graph this time series. Does a linear trend appear to be present?

b. Develop the equation for the linear trend component for the time series.

c. Use the trend equation to forecast the minimum average balance to avoid account fees for Spring 2006.

Reference no: EM131451685

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