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. SUMMARY OUTPUT - Order Model SUMMARY OUTPUT - 1 Order 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. SUMMARY OUTPUT -  Order Model  SUMMARY OUTPUT - 1  Order 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 among models with similar explanatory power, the simpler model (with fewer parameters) is preferred. The second-order model is more complex than a first-order model, so without evidence of significantly better forecasting, the first-order model would be considered better under the parsimony principle.

SCENARIO 16-11 the Manager of a Health Club Has Recorded