A time series regression equation for a surfboard manufacturing company in Australia is given below: Y = 35 + 4Q₁ + 0.5Q₃ + 8Q₄ + 3t
With t in quarters, the origin is December 2010 and Q₁ is the indicator variable for March, Q₃ is the indicator variable for September and Q₄ is the indicator variable for December.
Which of the following is the correct value of the estimate for the number of surfboards sold by this manufacturing company in June 2013?

Question

Quizplus · Accepted Answer

In June 2013, t = 11 (since December 2010 is the origin, and June 2013 is 11 quarters later). For June, Q1 = 0, Q3 = 0, Q4 = 0. Plug these into the equation: Y = 35 + 4(0) + 0.5(0) + 8(0) + 3(11) = 35 + 33 = 68.

A Time Series Regression Equation for a Surfboard Manufacturing Company