SCENARIO 16-11
The manager of a health club has recorded mean attendance in newly introduced step classes over the last 15 months: 32.1,39.5,40.3,46.0,65.2,73.1,83.7,106.8,118.0,133.1,163.3,182.8,
205.6,249.1,and 263.5.She then used Microsoft Excel to obtain the following partial output for both a first- and second-order autoregressive model.

-Referring to Scenario 16-11,based on the parsimony principle,the second- order model is the better model for making forecasts.

Question

SCENARIO 16-11
The manager of a health club has recorded mean attendance in newly introduced step classes over the last 15 months: 32.1,39.5,40.3,46.0,65.2,73.1,83.7,106.8,118.0,133.1,163.3,182.8,
205.6,249.1,and 263.5.She then used Microsoft Excel to obtain the following partial output for both a first- and second-order autoregressive model.

-Referring to Scenario 16-11,based on the parsimony principle,the second- order model is the better model for making forecasts.

Quizplus · Accepted Answer

The parsimony principle suggests that the simpler model is preferred if it has comparable forecasting accuracy. In this case, the first-order autoregressive model has a lower AIC and BIC than the second-order model, indicating that it is a better fit and more parsimonious. Therefore, the first-order autoregressive model would be preferred for making forecasts.

SCENARIO 16-11 The Manager of a Health Club Has Recorded Mean Attendance