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Statistics, Data Analysis, and Decision Modeling, 5e (Evans)
Chapter 7 Forecasting

1) A(n) ________ is a stream of historical data.

A) index
B) time series
C) irrational number
D) orthopole
Answer: B
Diff: 1
Blooms: Knowledge
Topic: Introduction
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

2) Time-series models ________.

A) assume that whatever forces have influenced sales in the recent past will continue into the
near future
B) assume that forecasts are seldom developed by extrapolating historical data into the future
C) include independent variables like, demand conditions and the current economy state that help
in forecasting
D) are also known as judgmental forecasting models
Answer: A
Diff: 1
Blooms: Knowledge
Topic: Introduction
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

3) If the sales forecaster at Dino Croc Inc.—before launching a new game—decides to use the
method of historical analogy to obtain a forecast, he/she should ________.
A) note the behavior of the company's current customers while they purchase a gaming accessory
B) note the response of similar previous games to marketing campaigns and use the responses as
a basis to predict how the new marketing campaign might fare
C) request a panel of gamers—whose identities should be kept confidential from one another—to
respond to a sequence of questionnaires
D) use a brainstorming session among a group of gamers to draw new ideas
Answer: B
Diff: 2
Blooms: Understand
Topic: Introduction
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-1
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
4) Which of the following uses a panel of experts, whose identities are typically kept confidential
from one another, to respond to a sequence of questionnaires?
A) the Simple Moving average method
B) the method of Historical Analogy
C) the Delphi method of forecasting
D) the Simple Exponential Smoothing method
Answer: C
Diff: 1
Blooms: Knowledge
Topic: Qualitative and Judgmental Methods
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

5) If the sales forecaster at Dex-Starr Inc.—before launching a new 12-string guitar—decides to

use the Delphi method to obtain a forecast, he/she should ________.
A) note the behavior of the company's current customers while they purchase guitars from the
current product line
B) note the response of similar 12-string guitars to marketing campaigns and use the responses as
a basis to predict how the new marketing campaign might fare
C) mail out questionnaires to a panel of expert guitarists whose identities are known only to the
forecaster
D) use a brainstorming session among a group of metal guitarists to draw new ideas
Answer: C
Diff: 1
Blooms: Understand
Topic: Qualitative and Judgmental Methods
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

6) The Delphi method of forecasting ________.

A) obtains forecasts through a comparative analysis with a previous situation
B) uses measures that are believed to influence the behavior of a variable that the researcher
wishes to forecast
C) uses a single measure that weights multiple indicators and provides a measure of overall
expectation
D) promotes unbiased exchanges of ideas and discussion and usually results in some
convergence of opinion
Answer: D
Diff: 2
Blooms: Knowledge
Topic: Qualitative and Judgmental Methods
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-2
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
7) What is the gradual shift in the value of the time series known as?
A) a trend
B) a coordinate
C) a weight
D) a smoothing constant
Answer: A
Diff: 2
Blooms: Knowledge
Topic: Statistical Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

8) In the context of time series, a cyclical effect differs from a seasonal effect in that the cyclical
effect ________.
A) shows a gradual shift in the time series
B) does not show a gradual shift in the time series
C) relates to much longer-term behavior
D) relates to much shorter-term behavior
Answer: C
Diff: 2
Blooms: Understand
Topic: Statistical Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

9) The data for the number of guitars sold for the past 6 weeks are 25 units, 20 units, 25 units, 25
units, 20 units, and 18 units respectively. The time series appears to be relatively stable, without
trend, seasonal, or cyclical effects; thus, a moving average model would be appropriate. Setting k
= 3 the three-period moving average forecast for week 7 is ________.
A) 18 units
B) 21 units
C) 25 units
D) 19 units
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-3
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
10) The data for the number of action figures sold for the past 6 weeks are 25 units, 20 units, 25
units, 25 units, 20 units, and 18 units respectively. If 50% weightage is given to week 6, 30%
weightage to week 5, and 20% weightage to week 4, what is the three-period weighted moving
average forecast for week 7?
A) 20 units
B) 18 units
C) 25 units
D) 21 units
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

11) Given: At = the actual value of the time series at time t, Ft = the forecast value for time t, and
n = the number of forecast values. Identify the formula used to calculate the mean absolute
deviation.
n2
A) MAD = n
 At - Ft
t =1
n


t =1
At - Ft
B) MAD =
n
n


t =1
At - Ft
C) MAD =
n2
n
D) MAD = n

t =1
At - Ft

Answer: B
Diff: 1
Blooms: Knowledge
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-4
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
12) If At is the actual value of the time series at time t, Ft is the forecast value for time t, and n is
the number of forecast values, the formula used to calculate the mean square of errors is
________.
n2
A) MSE = n
 ( At - Ft )2
t =1
n

 (A - F )
t =1
t t
2

B) MSE =
n2
n

 (A - F )
t =1
t t
2

C) MSE =
n
n

 (A + F )
t =1
t t
2

D) MSE =
n
Answer: C
Diff: 1
Blooms: Knowledge
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-5
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
13) If At is the actual value of the time series at time t, Ft is the forecast value for time t, and n is
the number of forecast values, the formula used to calculate the root mean square of errors is
________.
n2
A) RMSE = n

(A - F )
t =1
t t
2

(A - F )
t =1
t t
2

B) RMSE =
n2
n

(A + F )
t =1
t t
2

C) RMSE =
n
n

(A - F )
t =1
t t
2

D) RMSE =
n
Answer: D
Diff: 1
Blooms: Knowledge
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-6
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
14) Given: At = the actual value of the time series at time t, Ft = the forecast value for time t, and
n = the number of forecast values. Identify the formula used to calculate the mean absolute
percentage error.
n
At - Ft

t =1 At
A) MAPE = × 100
n
n
At - Ft

t =1 At2
B) MAPE = × × 100
n
n
At - Ft

t =1 At2
C) MAPE = × 100
n2
n
At

t = 1 At - Ft
D) MAPE = × 100
n
Answer: A
Diff: 1
Blooms: Knowledge
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-7
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Use the data given below to answer the following question(s).

The sales details for 6 weeks of a particular type of switches, called the "Twitch," are shown in
the table below. The value of k is set at 2.

Week Units sold

1 44
2 22
3 27
4 33
5 36
6 43

15) For the data given above, the forecast for week 5 is ________.
A) 33 units
B) 25 units
C) 30 units
D) 35 units
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

16) For the given data, identify the number of forecast values.
A) 2
B) 3
C) 4
D) 5
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-8
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
17) Using the given data, calculate the value of the mean absolute deviation.
A) 7.25
B) 54.13
C) 9.36
D) 21.10
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

18) Using the given data, determine the value of the mean square error.
A) 7.25
B) 9.36
C) 54.13
D) 21.10
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

19) For the given data, the value of the root mean square error is ________.
A) 9.25
B) 7.36
C) 54.13
D) 21.10
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-9
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
20) For the given data, identify the value of the mean absolute percentage error.
A) 9.25
B) 7.36
C) 54.13
D) 21.10
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

Use the data given below to answer the following question(s).

The sales details of a particular game are shown below. The value of k is set at 3.

Week Units sold

1 132
2 66
3 81
4 99
5 108
6 129

21) For the data given above, the forecast for week 7 is ________.
A) 112 units
B) 211 units
C) 121 units
D) 82 units
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-10
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
22) For the given data, identify the number of forecast values.
A) 2
B) 3
C) 4
D) 5
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

23) Using the given data, calculate the value of the mean absolute deviation.
A) 600.33
B) 24.50
C) 21.67
D) 18.57
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

24) For the given data, what is the value of the mean square error?
A) 600.33
B) 24.50
C) 21.67
D) 18.57
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-11
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
25) For the given data, what is the value of the root mean square error?
A) 600.33
B) 24.50
C) 21.67
D) 18.57
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

26) For the given data, the value of the mean absolute percentage error is ________.
A) 600.33
B) 24.50
C) 18.57
D) 21.67
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-12
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Use the data given below to answer the following question(s).

The table below shows the sales of a gaming console for the first 6 months of the year 2011.
The forecaster uses the weighted average model to determine the forecasts. He assumes a 40%
weight for the most recent reading, 30% weight for the second most recent reading, 20% for the
third most recent reading, and 10% for the fourth most recent reading.

Month Units sold

1 33
2 33
3 21
4 20
5 30
6 33

27) From the given data, determine the forecast for the 5th month.
A) 35.80 units
B) 58.80 units
C) 42.20 units
D) 24.20 units
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

28) For the data given above, the number of forecast values is ________.
A) 2
B) 3
C) 4
D) 5
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-13
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
29) Using the given data, calculate the value of the mean absolute deviation.
A) 26.95
B) 9.19
C) 6.65
D) 0.87
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

30) Using the given data, calculate the value of the mean square error.
A) 5.15
B) 44.95
C) 9.19
D) 0.87
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

31) Using the given data, determine the value of the root mean square error.
A) 9.15
B) 26.95
C) 0.87
D) 6.70
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-14
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
32) For the given data, the value of the mean absolute percentage error is ________.
A) 51.5
B) 26.95
C) 5.19
D) 21.03
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

33) In the simple exponential smoothing model Ft + 1 = (1 - α) Ft + αAt, the exponential

smoothing constant is ________.
A) Ft+1
B) α
C) At
D) Ft
Answer: B
Diff: 2
Blooms: Knowledge
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

34) The value of α in the simple exponential smoothing model Ft + 1 = (1 - α) Ft + αAt lies
between ________.
A) 1 and 2
B) -1 and 0
C) 0 and 1
D) -1 and 1
Answer: C
Diff: 2
Blooms: Knowledge
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-15
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Use the data given below to answer the following question(s).

The table below shows the car sales from the year 2002-2007. The forecaster assumes a
smoothing constant of 0.8 and uses the exponential smoothing model to determine the forecast
for the future.

Year Cars sold (in 000s)

2002 66
2003 33
2004 41
2005 49
2006 54
2007 65

35) From the data given above, determine the number of forecast values.
A) 3
B) 4
C) 5
D) 6
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

36) From the data given above, the forecast for the year 2005 (in 000s) is ________.
A) 39.60 units
B) 40.72 units
C) 47.34 units
D) 52.67 units
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-16
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
37) From the data given above, the sales forecast for the year 2008 (in 000s) is ________.
A) 40.72 units
B) 47.34 units
C) 52.67 units
D) 62.53 units
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

38) From the data given above, what is the forecast—in 000s—for the year 2003?
A) 41 units
B) 33 units
C) 66 units
D) 49 units
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

39) From the data given above, what is the forecast—in 000s—for the year 2004?
A) 39.60 units
B) 40.72 units
C) 47.34 units
D) 52.67 units
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-17
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
40) From the data given above, what is the forecast—in 000s—for the year 2006?
A) 39.60 units
B) 40.72 units
C) 47.34 units
D) 52.67 units
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

41) From the data given above, what is the forecast—in 000s—for the year 2007?
A) 39.60 units
B) 40.72 units
C) 47.34 units
D) 52.67 units
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

42) Using the given data, determine the value of the mean absolute deviation.
A) 225.98
B) 10.28
C) 15.03
D) 25.27
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-18
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
43) For the given data, the value of the mean square error is ________.
A) 225.98
B) 10.28
C) 15.03
D) 25.27
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

44) Using the given data, determine the value of the root mean square error.
A) 225.98
B) 10.28
C) 15.03
D) 25.27
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

45) Using the given data, calculate the value of mean absolute percentage error.
A) 12.56
B) 10.28
C) 15.03
D) 25.27
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-19
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
46) In the double exponential smoothing model Ft+k = at + btk, identify the value that signifies
the level.
A) at
B) Ft+k
C) bt
D) k
Answer: A
Diff: 1
Blooms: Knowledge
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

47) In the double exponential smoothing model Ft+k = at + btk, identify the value that signifies
the slope.
A) at
B) Ft+k
C) bt
D) k
Answer: C
Diff: 1
Blooms: Knowledge
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

48) In the double exponential smoothing model Ft+k = at + btk, identify the value that signifies
the trend.
A) at
B) Ft+k
C) k
D) bt
Answer: D
Diff: 1
Blooms: Knowledge
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-20
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Use the data given below to answer the following question(s).

The table below shows the industrial lathe sales from the years 2000-2005. The forecaster uses
the regression method to determine the forecast for the future.

Year Lathes sold

2000 3,300
2001 6,600
2002 4,100
2003 4,900
2004 5,400
2005 6,500

49) For the data given above, determine the regression equation.
A) y = 377.14x + 3,813.33
B) y = 3,813.33x + 377.14
C) y = 3,813.33x - 377.14
D) y = 377.14x - 3,813.33
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

50) For the data given above, the forecast for the year 2003 is approximately close to ________.
A) 5,699 units
B) 5,322 units
C) 4,945 units
D) 6,076 units
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-21
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
51) For the data given above, calculate the forecast value for the year 2006.
A) approximately 5,699 units
B) approximately 5,322 units
C) approximately 4,945 units
D) approximately 6,453 units
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

52) For the data given above, determine the sales forecast for the year 2011.
A) approximately 8,339 units
B) approximately 9,338 units
C) approximately 3,398 units
D) approximately 6,453 units
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

53) For the data given above, identify the value of MAD. [Hint: Round the forecast values to 3
decimal places.]
A) 1,014,031.75
B) 818.73
C) 1,006.99
D) 16.51
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-22
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
54) For the given data, the value of MSE is ________. [Hint: Round the forecast values to 3
decimal places.]
A) 1,014,031.75
B) 818.73
C) 1,006.99
D) 16.51
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

55) For the data given above, what is the value of RMSE? [Hint: Round the forecast values to 3
decimal places.]
A) 1,014,031.75
B) 818.73
C) 1,006.99
D) 16.51
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

56) Using the given data, determine the value of MAPE. [Hint: Round the forecast values to 3
decimal places.]
A) 10.14
B) 81.87
C) 1.00
D) 16.51
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-23
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
57) In the first-order autoregressive model Yi = a0 + a1Yi-1+ i, identify the nonautocorrelated
random error term.
A) a0
B) i
C) a1
D) Yi-1
Answer: B
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

58) If St - s + k is the seasonal factor for period t - s + k and s is the number of periods in a
season, the seasonal additive model can be written as ________.
A) Ft + k = at + St - s + k
B) Ft = at + St - s + k
C) Ft = at + k + St - s + k
D) Ft + k = (at + k) + St - s + k
Answer: A
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

59) If St - s + k is the seasonal factor for period t - s + k and s is the number of periods in a
season, the seasonal multiplicative model can be written as ________.
A) Ft + k = (at + k)St - s + k
B) Ft = at St - s + k
C) Ft = at +k St - s + k
D) Ft + k = at St - s + k
Answer: D
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-24
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
60) The Holt-Winters additive model is based on the equation ________.
A) Ft + 1 = at + bt + St - s - 2
B) Ft + 1 = at + bt + St - s + 1
C) Ft + 1 = at - 2 + bt + St - s - 2
D) Ft + 1 = at + bt -1 + St - 2
Answer: B
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

61) The Holt-Winters multiplicative model is based on the equation ________.

A) Ft + 1 = at (bt + St - s - 2)
B) Ft + 1 = at (bt + St - s + 1)
C) Ft + 1 = (at + bt) St - s + 1
D) Ft + 1 = (at + bt -1) St - 2
Answer: C
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

62) The Holt-Winters additive model differs from the Holt-Winters multiplicative model in that
the Holt-Winters additive model ________.
A) is synonymous to the double exponential smoothing forecast model
B) is synonymous to the single exponential smoothing forecast model
C) applies to time series with relatively stable seasonality
D) applies to time series whose amplitude increases or decreases over time
Answer: C
Diff: 1
Blooms: Understand
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-25
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
63) The Holt-Winters multiplicative model differs from the Holt-Winters additive model in that
the Holt-Winters multiplicative model ________.
A) is synonymous to the double exponential smoothing forecast model
B) is synonymous to the single exponential smoothing forecast model
C) applies to time series with relatively stable seasonality
D) applies to time series whose amplitude increases or decreases over time
Answer: D
Diff: 1
Blooms: Understand
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

64) If the given time series has no trend and no seasonality, which of the following is the most
appropriate forecasting model to determine the forecast of the time series?
A) the single moving average model
B) the seasonal additive model
C) the double exponential smoothing model
D) the Holt-Winters additive model
Answer: A
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

65) If the given time series has a trend and no seasonality, the ________ is the most appropriate
forecasting model to determine the forecast of the time series.
A) single exponential smoothing model
B) seasonal additive model
C) double moving average model
D) Holt-Winters multiplicative model
Answer: C
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-26
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
66) If the given time series exhibits seasonality but no trend, the ________ is the most
appropriate forecasting model to determine the forecast of the time series.
A) single moving average model
B) seasonal multiplicative model
C) double exponential smoothing model
D) Holt-Winters additive model
Answer: B
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

67) Jenny downloaded the company's umbrella sales for the past fiscal year to forecast the sales
for the next fiscal year. Looking at the downloaded data set, she decided to use the Holt-Winters
multiplicative model because the data set showed ________.
A) no trend and no seasonality
B) trend and seasonality
C) a trend and no seasonality
D) seasonality and no trend
Answer: B
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

68) Sue decided to use the double moving average model to forecast the game sales for the next
week, after looking at the tabulated sales for the past twelve weeks. What exactly did she
observe?
A) a time series with no trend and no seasonality
B) a time series with trend and seasonality
C) a time series with trend and no seasonality
D) a time series with seasonality and no trend
Answer: C
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-27
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Use the data shown below to answer the following question(s).

The table below shows the sales details of a kind of vegetable sold at a department store for each
week.

Pounds Week Price/pound

8,815 1 $2.35
6,541 2 $2.40
6,650 3 $3.12
9,949 4 $4.98
8,600 5 $4.01
12,430 6 $4.92
10,910 7 $5.03
8,889 8 $4.98
12,721 9 $2.92
14,830 10 $2.90
11 $14.80

69) For the given data, determine the multiple regression equation.
A) Forecast = 6,879.27 + 724.10Week - 220.24Price/pound
B) Forecast = 724.10 + 6,879.27Week - 220.24Price/pound
C) Forecast = 724.10 + 220.24Week - 6,879.27Price/pound
D) Forecast = 6,879.27 + 220.24Week - 724.10Price/pound
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

70) Using the given data, determine the forecast for week 11.
A) approximately 10,840 pounds
B) approximately 8,410 pounds
C) approximately 12,753 pounds
D) approximately 11,585 pounds
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-28
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
71) If the price/pound of the vegetable sold on week 15 is $5, determine the forecast for week 15.
A) approximately 20,840 pounds
B) approximately 18,410 pounds
C) approximately 16,640 pounds
D) approximately 11,584 pounds
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

72) Using the given data, calculate the value of mean absolute deviation.
A) 2,444,136.45
B) 1,563.37
C) 1,341.46
D) 14.78
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

73) For the given data, the value of the mean square error is ________.
A) 2,444,136.45
B) 1,563.37
C) 1,341.46
D) 14.78
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-29
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
74) For the given data, the value of the root mean square error is ________.
A) 2,444,136.45
B) 1,563.37
C) 1,341.46
D) 14.78
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

75) For the given data, what is the value of mean absolute percentage error?
A) 24.45
B) 37.63
C) 14.78
D) 64.31
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

76) In historical analogy, the forecast is obtained by using a panel of experts, whose identities are
typically kept confidential from one another, to respond to a sequence of questionnaires.
Answer: FALSE
Diff: 1
Blooms: Knowledge
Topic: Qualitative and Judgmental Methods
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

77) In the Delphi method, the forecast is obtained through a comparative analysis with a previous
situation.
Answer: FALSE
Diff: 1
Blooms: Knowledge
Topic: Qualitative and Judgmental Methods
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-30
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
78) A seasonal effect is one that repeats at fixed intervals of time, typically a year, month, week,
or day.
Answer: TRUE
Diff: 1
Blooms: Knowledge
Topic: Statistical Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

79) A seasonal effect in a time series is relatively long-term effect compared to a cyclical effect.
Answer: FALSE
Diff: 1
Blooms: Knowledge
Topic: Statistical Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

80) Moving average and exponential smoothing models work best for stationary time series.
Answer: TRUE
Diff: 1
Blooms: Knowledge
Topic: Statistical Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

81) In the double forecasting model Ft + k = at + btk, the value k denotes the trend in the model.
Answer: FALSE
Diff: 1
Blooms: Knowledge
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

82) In the double forecasting model Ft + k = at + btk, Ft + k denotes the level in the model.
Answer: FALSE
Diff: 1
Blooms: Knowledge
Topic: Forecasting Models for Time Series with a Linear Trend
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-31
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
83) If a time series has a trend and no seasonality, the double exponential smoothing model is the
most appropriate model to be used for forecasting.
Answer: TRUE
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

84) If a time series has a trend and seasonality, the simple exponential smoothing model is the
most appropriate model to be used for forecasting.
Answer: FALSE
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

85) Holt-Winters' forecasting models are examples of qualitative and judgmental forecasting
methods.
Answer: FALSE
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

86) Write a brief note on the explanatory or causal models used in forecasting.
Answer: Explanatory/causal models, often called econometric models, seek to identify factors
that explain statistically the patterns observed in the variable being forecast, usually with
regression analysis.
For example, forecasting the price of oil might incorporate independent variables such as the
demand for oil (measured in barrels), the proportion of oil stock generated by OPEC countries,
and tax rates.
Diff: 1
Blooms: Knowledge
Topic: Introduction
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-32
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
87) Briefly describe the method of historical analogy used in forecasting.
Answer: In historical analogy, a forecast is obtained through a comparative analysis with a
previous situation. For example, if a new product is being introduced, the response of similar
previous products to marketing campaigns can be used as a basis to predict how the new
marketing campaign might fare.
Diff: 1
Blooms: Knowledge
Topic: Qualitative and Judgmental Methods
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

88) What is the Delphi method?

Answer: The Delphi method uses a panel of experts, whose identities are typically kept
confidential from one another, to respond to a sequence of questionnaires. After each round of
responses, individual opinions, edited to ensure anonymity, are shared, allowing each to see what
the other experts think.
Diff: 1
Blooms: Knowledge
Topic: Qualitative and Judgmental Methods
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

89) How do indicators and indexes help in forecasting?

Answer: Indicators and indexes generally play an important role in developing judgmental
forecasts. Indicators are measures that are believed to influence the behavior of a variable we
wish to forecast. By monitoring changes in indicators, we expect to gain insight about the future
behavior of the variable to help forecast the future.
Indicators are often combined quantitatively into an index. The direction of movement of all the
selected indicators are weighted and combined, providing an index of overall expectation.
Diff: 1
Blooms: Knowledge
Topic: Qualitative and Judgmental Methods
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-33
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
90) Explain the simple moving average method used in forecasting.
Answer: The simple moving average method is a smoothing method based on the idea of
averaging random fluctuations in the time series to identify the underlying direction in which the
time series is changing. Because the moving average method assumes that future observations
will be similar to the recent past, it is most useful as a short-range forecasting method.
Specifically, the simple moving average forecast for the next period is computed as the average
of the most recent k observations. The value of k is somewhat arbitrary, although its choice
affects the accuracy of the forecast.
Diff: 1
Blooms: Knowledge
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

Use the data shown below to answer the following question(s).

The table below is the data set of the Shiller Real Home Price Index for the years 1985-2000.

Year Price Index

1985 107.7450408
1986 111.1730909
1987 118.9245131
1988 122.8489601
1989 127.5113167
1990 126.4770851
1991 116.3061973
1992 114.7016125
1993 111.3212039
1994 111.4965192
1995 110.2706524
1996 109.924555
1997 109.6386511
1998 113.0744612
1999 119.4819042
2000 126.2995915

91) Setting k = 3, determine the simple moving average forecast for the year 1995.
Answer: Year 1995 forecast = (111.4965192 + 111.3212039 + 114.7016125)/3 = 112.5064452
113.
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-34
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
92) Setting k = 5, calculate the simple moving average forecast for the year 2000.
Answer: Year 2000 forecast = (119.4819042 + 113.0744612 + 109.6386511 + 109.924555 +
110.2706524)/5 = 112.4780448 112.
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

93) Setting k = 3, determine the value of the mean absolute deviation.

Answer:
Year X Price Index Ft At - Ft | At - Ft |
1985 1 107.7450408
1986 2 111.1730909
1987 3 118.9245131
1988 4 122.8489601 112.614215 10.234745 10.234745
1989 5 127.5113167 117.648855 9.862462 9.862462
1990 6 126.4770851 123.09493 3.382155 3.382155
1991 7 116.3061973 125.612454 -9.306257 9.306257
1992 8 114.7016125 123.431533 -8.729921 8.729921
1993 9 111.3212039 119.161632 -7.840428 7.840428
1994 10 111.4965192 114.109671 -2.613152 2.613152
1995 11 110.2706524 112.506445 -2.235793 2.235793
1996 12 109.924555 111.029459 -1.104903 1.104903
1997 13 109.6386511 110.563909 -0.925258 0.925258
1998 14 113.0744612 109.944620 3.129842 3.129842
1999 15 119.4819042 110.879222 8.602682 8.602682
2000 16 126.2995915 114.065006 12.234586 12.234586


t =1
At - Ft
80.20
MAD = = = 6.17
n 13
The mean absolute deviation is 6.17.
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-35
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
94) Setting k = 3, determine the value of the mean square of errors.
Answer:
Year X Price Index Ft At - Ft |At - Ft| (At - Ft)2
1985 1 107.7450408
1986 2 111.1730909
1987 3 118.9245131
1988 4 122.8489601 112.614215 10.234745 10.234745 104.750009
1989 5 127.5113167 117.648855 9.862462 9.862462 97.268157
1990 6 126.4770851 123.09493 3.382155 3.382155 11.438973
1991 7 116.3061973 125.612454 -9.306257 9.306257 86.606413
1992 8 114.7016125 123.431533 -8.729921 8.729921 76.211513
1993 9 111.3212039 119.161632 -7.840428 7.840428 61.472307
1994 10 111.4965192 114.109671 -2.613152 2.613152 6.828564
1995 11 110.2706524 112.506445 -2.235793 2.235793 4.998769
1996 12 109.924555 111.029459 -1.104903 1.104903 1.220812
1997 13 109.6386511 110.563909 -0.925258 0.925258 0.856102
1998 14 113.0744612 109.944620 3.129842 3.129842 9.795909
1999 15 119.4819042 110.879222 8.602682 8.602682 74.006134
2000 16 126.2995915 114.065006 12.234586 12.234586 149.685095

 (A - F )
t =1
t t
2

685.14
MSE = = = 52.70
n 13
The value of the mean square of errors is 52.70.
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

95) Setting k = 3, determine the value of the root mean square of errors.
Answer: MSE = 52.70
RMSE = MSE = 52.70 = 7.26
The value of the root mean square of errors is 7.26.
Diff: 1
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-36
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
96) Setting k = 3, determine the value of the mean absolute percentage of error.
Answer:
Year X Price Index Ft At - Ft | At - Ft | (At - Ft)2 |At - Ft/At|
1985 1 107.7450408
1986 2 111.1730909
1987 3 118.9245131
1988 4 122.8489601 112.614215 10.234745 10.234745 104.750009 0.083312
1989 5 127.5113167 117.648855 9.862462 9.862462 97.268157 0.077346
1990 6 126.4770851 123.09493 3.382155 3.382155 11.438973 0.026741
1991 7 116.3061973 125.612454 -9.306257 9.306257 86.606413 0.080015
1992 8 114.7016125 123.431533 -8.729921 8.729921 76.211513 0.07611
1993 9 111.3212039 119.161632 -7.840428 7.840428 61.472307 0.070431
1994 10 111.4965192 114.109671 -2.613152 2.613152 6.828564 0.023437
1995 11 110.2706524 112.506445 -2.235793 2.235793 4.998769 0.020276
1996 12 109.924555 111.029459 -1.104903 1.104903 1.220812 0.010051
1997 13 109.6386511 110.563909 -0.925258 0.925258 0.856102 0.008439
1998 14 113.0744612 109.944620 3.129842 3.129842 9.795909 0.027679
1999 15 119.4819042 110.879222 8.602682 8.602682 74.006134 0.072
2000 16 126.2995915 114.065006 12.234586 12.234586 149.685095 0.09687

n
At - Ft
t =1 At 0.6727
MAPE = × 100 = × 100 = 5.17
n 13
The value of the mean absolute percentage of error is 5.17.
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

97) Setting k = 3, determine the simple moving average forecast for the year 2001.
Answer: Year 2001 forecast = (126.2995915 + 119.4819042 + 113.0744612)/3 = 119.6186523 ≈
120.
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-37
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
98) Briefly explain the simple exponential smoothing model used in forecasting.
Answer: The basic simple exponential smoothing model is:
Ft + 1 = (1 - α) Ft + αAt
where Ft + 1 is the forecast for time period t + 1, Ft is the forecast for period t, At is the observed
value in period t, and α is a constant between 0 and 1, called the smoothing constant.
Diff: 1
Blooms: Knowledge
Topic: Forecasting Models for Stationary Time Series
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

99) What is an autoregressive forecasting model?

Answer: An autoregressive forecasting model incorporates correlations between consecutive
values in a time series by using explanatory variables that are lagged values of the dependent
variable. A first-order autocorrelation refers to the correlation among data values one period
apart, a second-order autocorrelation refers to the correlation among data values two periods
apart, and so on. Autoregressive models improve forecasting when autocorrelation is present in
data. A first-order autoregressive model is:
Yi = a0 + a1Yi -1 + δi
where Yi is the value of the time series in period i and δi is a nonautocorrelated random error
term having 0 mean and constant variance. A second-order autoregressive model is:
Yi = a0 + a1Yi -1 + a2Yi -2 + δi
Additional terms may be added for higher-order models.
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

100) Briefly explain the seasonal additive model used in forecasting.

Answer: The seasonal additive model is:
Ft + k = at + St - s + k
St - s + k is the seasonal factor for period t - s + k and s is the number of periods in a season. A
"season" can be a year, quarter, month, or even a week, depending on the application.
Diff: 1
Blooms: Knowledge
Topic: Advanced Forecasting Models
Learning Outcome: Discuss the applications of time-series forecasting, trend models, and
qualitative approaches

7-38
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
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fowl, 276
veal, 230
veal, with oysters, 231
Mincemeat (author’s receipt), 368
superlative, 369
fritters, 383
Mince pies (entremets), 369
royal, 370
Miniature round of beef, 199
Mint julep, 582
sauce, 132
Mock, brawn, 260
turtle soup, 23
turtle soup, good old-fashioned, 26
Modern blanc-mange-mould, 476
cake-mould, 540
chicken pie, 353
jelly-mould, 470
potato pasty, 350
varieties of calf’s feet jelly, 463
Monitor’s tart, or tourte à la Judd, 370
Moor game, to roast and hash, 291, 292
Mould for French pies, or casseroles of rice, 344
Mull, to, wine, an excellent receipt (French), 581
Mullagatawny soup, 35
vegetable, 37
Mullet, grey, to boil, 76
red, to bake, broil, or roast, 76
Mushroom catsup, 146
catsup, another receipt for, 148
catsup, double, 148
forcemeat, 159
powder, 154
sauce, brown, 123
sauce, another, 123
sauce, white, 122
Mushrooms, au beurre, 329
dried, 153
partridges with, 289
in pigeon pie, 354
pickled, in brine for winter use, 536
to pickle, 535
potted (delicious), 330
toast, or croûte aux champignons, 330
Mussel-plums, preserves of, 516
Mustard, to make, 130
mild, 130
Tartar, 155
another Tartar, 155
horseradish vinegar for ditto, 153
Mutton, broth, 44
to choose, 233
cutlets broiled, and Soubise sauce, 243
cutlets, to broil, 241
cutlets of, cold, 243
cutlets, stewed in their own gravy, 240
fillet of, roast or stewed, 238
haunch of, to roast, 234
 kidneys à la Française (entrée), 243
kidneys, broiled, 244
kidneys, Oxford receipt for, 244
leg of, to boil (an excellent receipt), 237
leg of, boned and forced, 236
leg of, braised, 236
leg of, roast, 235
loin of, roast, 238
loin of, stewed like venison, 239
neck of, roast, 239
pie, common, 355
pie, good, 355
pudding, 401
saddle of, to roast, 235
shoulder of, broiled, 240
shoulder of, to roast, 239
shoulder of, forced, 240
a good family stew of, 242
stock for soup, 16
Nasturtiums, to pickle, 539
Nesselrôde cream, 471
pudding, 491
Norfolk biffins, dried, 572
sauce, 99
Norman harricot, 224
Normandy pippins, 572
Nougat, 564
Nouilles, to make, 5
Œufs au plat, 450
pochés au jus, 449
Old-fashioned boiled custard, 481
Oil, to fry salmon and other fish in (Jewish), 607
Olive sauce, 128
Omlette aux fines herbes, 380
soufflée, 381
Omlets, observations on, 380
Omlet, common, 380
King of Oude’s, 612
Onion sauce, brown, 125
sauce, brown, another receipt for, 125
sauce, white, 125
Onion and sage stuffing for ducks and geese, No. 9, 160
rich white sauce of, or Soubise, 126
Onions, to pickle, 537
stewed, 342
Orange, baskets for jelly, 466
calf’s feet jelly, 464
conserve for cheese-cakes, or pudding, 501
fritters, 384
gravy, 102
isinglass jelly, 465
marmalade, 527, 529
plums, preserve of, 514
salad, 571
snow-balls, 420
wine, 585
Orange-flower, candy, 565, 566
Seville, paste, 568
filled with jelly in stripes, 466
Tangerine, 571
Oven, American, 178
management of, 595
objection to iron ones, 595
Oxford receipt for Bishop, 580
for mutton kidneys, 244
 punch, 580
Ox-cheek, stuffed and baked, 208
Ox-tail, broiled (entrée), 195
stewed, 195
soup, 42
Ox tongue, to pickle, 202
potted, 305
Oyster forcemeat, No. 5, 159;
No. 6, 159
patties, 359
sauce, common, 114
sauce, good, 114
sausages, 87
soup, white, or à la Reine, 30
Oysters, curried, 302
to feed, 85
to fry, 80
scalloped, à la Reine, 86
to scallop, 86
to stew, 86
to stew, another receipt, 87
Pain de pore frais, or sausage-meat cake, 261
Pain de veau, or veal cake, 222
Pain de veau (Bordyke receipt), 222
Palace-bonbons, 567
Palates, beef, to dress, 194, 195
Panada, 165
Pancakes, 382
to crisp, 130
fried, 130
Parsley green for colouring sauces, 129
Parsneps, to boil, 337
fried, 337
Partridge, broiled (breakfast dish), 290
broiled (French receipt), 290
French, or red-legged, to dress, 290
potted, 305
pudding, 401
soup, 35
Partridges, boiled, 289
with mushrooms, 289
to roast, 288
salmi, or rich hash of, 292
salmi of (French), 292
Paste, almond, 367
brioche, 349
cherry (French), 504
currant, 510
gooseberry, 501
very good light, 346
English puff, 316
fine puff, or feuilletage, 345
quince, 525
Pastry, to colour almonds or sugar-grains for, 542
to glaize or ice, 345
icing for, 345
sugar-icing for, 543
her Majesty’s, 366
general remarks on, 344
sandwiches, 374
Pasty, potato, 350
varieties of, 351
mould for, 351
Pâte Brisée, or French crust for hot or cold pies, 347
Patties à la Pontife (entrées), 360
 good chicken, 359
common lobster, 559
superlative lobster, author’s receipt, 359
oyster (entrée), 359
sweet boiled, 422
tartlets, or small vols-au-vents, to make, 361
Peach, fritters, 384
jam, or marmalade, 518
mangoes, 534
Peaches, compote of, 459
to dry, an easy and excellent receipt, 518
to pickle, 534
preserved in brandy (Rotterdam receipt), 571
stewed, 459
Suédoise of, 488
vol-au-vent of, 358
Pears, baked, 573
stewed, 573
meringue of, 486
Pearled fruit, 570
Peas, green, to boil, 320
green, with cream, 321
green, soup of, 39, 40
green, stewed, à la Française, 320
pudding, 401
soup, common, 41
soup without meat, 42
soup, rich, 41
Perch, to boil, 82
to fry, 83
Pheasant, boudin of, 288
cutlets, 275
to roast, 287
salmi of, 292
 soup, 33, 34
Pickle, for beef, tongue, and hams, 197
Hamburgh, for pork, &c., 197
to, beet-root, 537
cherries, 532
eschalots, 532
gherkins, 537
gherkins (French receipt), 533
limes, 538
lemons, 538
lemon mangoes, 538
melon, sweet (foreign receipt), 534
mushrooms in brine, 536
mushrooms (an excellent receipt), 535
nasturtiums, 539
onions, 537
peaches, and peach mangoes, 534
red cabbage, 539
walnuts, 536
Pickles, where to be procured good, 532
general remarks on, 531
Pie, beef-steak, 354
a common chicken, 353
a modern chicken, 353
a good common English game, 352
mutton, common, 355
a good mutton, 355
pigeon, 354
Pies, excellent, cream crust for, 347
French crust for, 347
suet-crust for, 348
meat jelly for, 92
mince, 369
mince royal, 370
pudding (entremets), 371
 raised, 356
Pigeons, to boil, 280
to roast, 280
served with cresses, for second course, 280
Pig, divisions of, 247
Kentish mode of cutting up and curing, 254
to bake a sucking, 250
sucking, en blanquette (entrée), 250
to roast a sucking, 249
à la Tartare (entrée), 250
Pig’s cheeks, to pickle, 254
feet and ears, in brawn, 260
Pike to bake, 81
to bake (superior receipt), 81
to boil, 80
Pilaw, a simple Syrian, 613
Pine-apple marmalade, superior, 513
pudding-sauce, 405
pudding-sauce, very fine, 405
Pintail, or Sea Pheasant, to roast, 294
Pippins, Normandy, to stew, 572
Piquante sauce, 118
Plaice, to boil, 75
to fry, 75
Plate, hot, for cooking, 174
Plum-puddings, 416, 417, 441, &c.
Plums, compote of, 458
Imperatrice, to dry, 521
Imperatrice, marmalade of, 521
Poêlée, 169
Poet’s, the, receipt for salad, 135
Polenta à l’Italienne, 393
Pontac catsup, 150
Poor author’s pudding, 442
Pork, to choose, 247
cutlets of, to boil or fry, 251
Italian cheese of, 260
different joints of, 247
observations on, 247
to pickle, 254
to roast, 251
to roast a saddle of, 251
sausages of, 261, 263
Portable lemonade, 583
Potage à la Reine, 29
Pot-au-Feu, or stock pot, 8
fowls, &c., boiled in, 9
Potato-balls (English), or croquettes, 314
boulettes (good), 314
bread, 600
fritters, 384
flour, or fecule de pommes de terre, 154
pasty (modern), 350
puddings, 436
ribbons, to serve with cheese, 313
rissoles, French, 315
soup, 21
Potatoes, à la crême, 315
à la Maître d’Hôtel, 315
to boil, as in Ireland, 310
to boil (Lancashire receipt), 311
boulettes (entremets), 314
to boil (Captain Kater’s receipt), 312
crisped, or potato-ribbons (entremets), 313
fried (entremets), 313
 mashed and moulded in various ways 313
new, in butter, 312
new, to boil, 311
remarks on their properties and importance, 309
to roast or bake, 312
scooped (entremets), 312
Potted anchovies, 306
chicken, partridge, or pheasant, 305
ham, 304
hare, 307
meats (various), 303
meat for the second course, moulded, 306
mushrooms, 330
ox-tongue, 305
shrimps, or prawns, 306
Poultry, to bone, 265
to bone, another mode, 265
to bone, for fricassees, &c., 266
to choose, 264
to lard, 181
Powder, mushroom, 154
of savoury herbs, 155
Prawns, to boil, 93
to dish cold, 93
to pot (see shrimps:306)
to shell easily, 93
Prepared apple or quince juice, 456
calf’s head (the cook’s receipt), 211
Preserved fruit, general remarks on the use and value of, 493
Preserve, a fine, of red currants, 509
delicious, of white currants, 510
good common, 512
an excellent, of the green orange, or Stonewood plum, 514
groseillée, a mixed, 513
 another good mélange, or mixed, 513
nursery, 512
Preserve, to, the colour and flavour of fruit-jams and jellies, 497
Preserving-pan, 495
Preserves, French furnace and stewpan convenient for making, 494,
495
general rules and directions for, 496
Pruneaux de Tours, or compote of dried plums, 573
Prince Albert’s pudding, 411
Pudding (baked), à la Paysanne (cheap and good), 442
almond, 425
almond, Jewish, 608
apple or custard, 437
apple (the lady’s or invalid’s new), 608
Bakewell, 427
barberry and rice, 406
light batter, 443
good bread, 429, 430
common bread and butter, 429
rich bread and butter, 428
cake and custard, and various inexpensive, 437
curate’s, 442
the good daughter’s mincemeat, 426
Dutch custard, or raspberry, 438
the elegant economist’s, 428
Gabrielle’s, or sweet casserole of rice, 438
green gooseberry, 435
good ground rice, 437
a common ground rice, 435
Mrs. Howitt’s (author’s receipt), 426
an excellent lemon, 426
lemon-suet, 427
Normandy, 441
plum, en moule, or moulded, 424
 poor author’s, 442
(baked) potato, 436
a richer potato, 436
the printers’, 424
the publishers’, 410
Queen Mab’s, 470
a common raisin, 441
a richer raisin, 442
raspberry, or Dutch custard, 438
ratafia, 427
cheap rice, 434
a common rice, 433
a French rice, or Gâteaux de riz, 433
rice, meringué, 434
richer rice, 434
rice, à la Vathek, 440
Saxe-Gotha, or tourte, 431
a good semoulina, or soujee, 430
a French semoulina (or Gâteau de semoule), 430
soujee and semola, 439
sponge cake, 436
vermicelli, 439
welcome guest’s own, 412
common Yorkshire, 440
good Yorkshire, 440
young wife’s (author’s receipt), 425
Pudding (boiled) à la Scoones, 416
apple, cherry, currant, or any other fresh fruit, 408
a common apple, 409
the author’s Christmas, 417
common batter, 406
another batter, 406
batter and fruit, 407
beef-steak, or John Bull’s, 399
beef-steak, epicurean receipt for, 400
small beef-steak, 400
a black-cap, 407
 Ruth Pinch’s, or beef-steak à la Dickens, 401
bread, 418
brown bread, 419
cabinet, 413
a very fine cabinet, 414
common custard, 411
the elegant economist’s, 415
German pudding and sauce, 412
Herodotus’ (a genuine classical receipt), 409
Ingoldsby Christmas, 416
Her Majesty’s, 410
mutton, 401
partridge, 401
peas, 401
small light plum, 416
Prince Albert’s, 411
the publishers’, 410
vegetable plum, 417
a very good raisin, 415
a superior raisin 415
a cheap rice, 420
a good rice, 419
rice and gooseberry, 420
rolled, 418
savoury, 399
Snowdon, 414
Kentish suet, 407
another suet, 408
the welcome guest’s own (author’s receipt), 412
a Kentish well, 417
Baden-Baden, 431
Puddings, general directions for baked, 423
to mix batter for, 397
general directions for boiled, 395
butter crust for, 398
cloths for, to wash, 366
suet-crust for, 398
 to clean currants for, 397
Madeleine, to serve cold, 432
sauces for sweet, 402, 406
to steam in common stewpan, 397
Sutherland, or castle, 432
Pudding-pies, 371
a common receipt for, 371
Pudding sauces, sweet, 402-406
Puff-paste, canellons of, 417
English, 346
finest, or feuilletage, 345
very good light, 346
Puffs, German, 484
raspberry, or other fruit, 375
Punch, Cambridge milk, 581
Oxford, 580
Punch, Regent’s, or George IV.’s (a genuine receipt), 582
sauce for sweet puddings, 402
Purée, fine, of onions, or Soubise sauce, 126
of tomatas, 328
of turnips, 127
of vegetable marrow, 127
Quenelles, or French forcemeat, 163
Queen cakes, 556
Queen’s custard, 481
Queen Mab’s pudding, 470
Quince blamange, 478
blamange, with almond cream, 478
custards, 482
jelly, 524
juice, prepared, 456
marmalade, 524
 and apple marmalade, 525
paste, 525
Rabbits, to boil, 286
Rabbit, to fry, 287
to roast, 286
soup, à la Reine, 31
soup, brown, 31
Radishes, turnip, to boil, 318
Ragout, mild, of garlic, 126
Raisin puddings, 441, 442
wine, which resembles foreign, 583
Ramakins à l’Ude, 375
Raspberries, to preserve for creams or ices, without boiling, 506
Raspberry jam, 506
jam, red or white, 506
jelly, for flavouring creams, 507
jelly, another good, 508
vinegar, very fine, 578
Red cabbage, to stew, 340
Regent’s, or George IV.’s punch (genuine), 582
Remoulade, 137
Rhubarb, or spring fruit, compote of, 457
Rice, to boil for curries, or mullagatawny soup, 36
boiled, to serve with stewed fruit, &c., 422
cake, 546
casserole of, savoury, 351
casserole of, sweet, 438
croquettes of, 385, 386
savoury croquettes of, 386
puddings, 419, 420, 433-435
soup, 14
 soup, white, 15
sweet, à la Portugaise, or arocē docē, 489
Rice flour, to make, 154
soup, 15
to thicken soups with, 4
Risotto à la Milanaise, 615
Rissoles, 387
very savoury, English (entrée), 387
Roasting, general directions for, 169
slow method of, 171
Roast beef (see Chapter X.)
chestnuts, 574
game (see Chapter XV.)
lamb (see Chapter XII.)
mutton (see Chapter XII.)
potatoes, 312
pork (see Chapter XIII.)
poultry (see Chapter XIV.)
veal (see Chapter XI.)
Rolled shoulder of mutton, 240
ribs of beef, 198
sirloin of beef, 198
Roll, beef, or canellon de bœuf, 201
Rolls, breakfast or dinner, 600
Geneva, 601
excellent meat, 360
Roux, or French thickening brown (for sauces), 106
white, 106
Rusks, sweet, 554
Rusks, 602
Sago soup, 14
Salad, to dress (English), 140
forced eggs for garnishing, 137
French, 140
of mixed summer fruits, 570
excellent herring (Swedish receipt), 143
lobster, 142
very elegant lobster, 584
orange, 571
peach, 570
the Poet’s receipt for, 135
Suffolk, 141
walnut, or des cerneaux, 141
Yorkshire ploughman’s, 141
dressings and sauces, 140
sorrel, 142
of young vegetables, 141
Salamander to brown with, 183
Salmi of moor fowl, pheasants or partridges, 292
French, or hash of game, 292
of wild fowl, 294
Salmon à la Genevese, 59
à la St. Marcel, 60
baked over mashed potatoes, 60
to boil, 59
crimped, 60
to fry in oil, 607
pudding (Scotch receipt), 60
Salsify, to boil, 341
to fry in batter, 341
Salt fish, to boil, 62
à la Maître d’Hôtel, 63
Salt, to, beef, in various ways, 196
Sandwiches, lemon, 374
pastry, 374
Sand-launce, or Sand-eel, mode of dressing, 77
Salzburger Nockerl, 620
Sauce (American), cold, for salads, salt fish, &c., 133
anchovy, 115
baked apple, 124
boiled apple, 124
brown apple, 125
arrow-root, clear, 403
asparagus, for lamb cutlets, 120
béchamel, 107
béchamel maigre, 108
another common béchamel, 108
bread, 112
bread, with onion, 113
caper, 121
brown caper, 121
caper for fish, 121
celery, 128
brown chestnut, 129
white chestnut, 129
Chatney, capsicum, 144
Chatney, sausage, 609
Chatney, shrimp (Mauritian receipt), 144
Chatney, tomato, 609
Chatney (Bengal receipt), 146
Christopher North’s own (for many meats), 119
crab, 114
cream, for fish, 115
common cucumber, 121
another common cucumber, 122
white cucumber, 122
currants, 404
Dutch, 111
cold, Dutch, 133
common egg, 110
egg, for calf’s head, 111
very good egg, 110
English, for salad, cold meat, &c., 134
epicurean, 151
mild eschalot, 127
Espagnole, 100
Espagnole, with wine, 100
fricassee, 112
fruit, superior, 404
mild garlic, 126
Genevese, or sauce Genevoise, 117
German, for fricassees, 107
German cherry, 406
German custard pudding, 403
gooseberry, for mackerel, 120
horseradish, excellent, to serve hot or cold, with roast beef, 118-
133
hot horseradish, 119
the lady’s, for fish, 117
common lobster, 113
Maître d’Hôtel, or steward’s sauce, 116
cold Maître d’Hôtel, 133
Maître d’Hôtel sauce maigre, 117
sharp Maître d’Hôtel, 116
Imperial mayonnaise, 136
mayonnaise, red or green, 136
mayonnaise (very fine), to serve with cold meat, fish, or
vegetables, 135
mint, common, 132
mint (superior), for roast lamb, 133
strained, 132
brown mushroom, 123
another mushroom, 123
white mushroom, 122
Norfolk, 109
olive, 128
brown onion, 125
another brown onion, 125