For a given product demand, the time-series trend equation is 53 - 4x. The negative sign on the slope of the equation:
A) is a mathematical impossibility.
B) is an indication that the forecast is biased, with forecast values lower than actual values.
C) is an indication that product demand is declining.
D) implies that the coefficient of determination will also be negative.
E) implies that the cumulative error will be negative.

Question

Quizplus · Accepted Answer

The negative slope of the equation (−4) indicates that product demand is declining over time. Option A is incorrect because it is not a mathematical impossibility for a time-series trend equation to have a negative slope. Option B is incorrect because the bias of the forecast cannot be inferred from the slope of the trend equation alone. Option D and E are incorrect because the coefficient of determination and cumulative error are not necessarily related to the slope of the trend equation.

For a Given Product Demand, the Time-Series Trend Equation Is