Consider the following set of quarterly sales data given in thousands of dollars.The following dummy variable model that incorporates a linear trend and constant seasonal variation was used: yt = β0+ β1t + βQ1(Q1)+ βQ2(Q2)+ βQ3(Q3)+ εt
In this model there are 3 binary seasonal variables (Q1,Q2,and Q3).
Where
Qi is a binary (0,1)variable defined as:
Qi = 1,if the time series data is associated with quarter i;
Qi = 0,if the time series data is not associated with quarter i.
The results associated with this data and model are given in the following computer output.
The prediction equation is
Sales = 2442 + 6.2 Time - 693 Q1 - 1499 Q2 + 153 Q3
Analysis of Variance
-Provide a managerial interpretation of the regression coefficients for the variable "Q1" (quarter 1),"Q2" (quarter 2)and "Q3" (quarter 3).
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