S5. Your company’s sales have been growing steadily over the last 17
quarters, as shown in the following table.Quarter Quantity Sales Quarter Quantity Sales
1 103.2 9 137.1
2 105.7 10 140.9
3 111.3 11 142.7
4 113.8 12 149.3
5 116.9 13 154.4
6 121.8 14 158.1
7 125.0 15 164.8
8 132.4 16 172.0
17 181.3You wish to predict the next four quarters’ sales. (You are aware that
your product’s sales have no seasonal component.)
a. Using regression techniques, find the linear time trend that best fits
the sales data. How well does this equation fit the past data?
b. Now estimate the constant-growth equation, Q brt. Find the
coefficients for b and r. Does this equation perform better than the
linear form in part (a)? Explain.
c. Predict sales for the next four quarters using both equations.
S6. The accompanying table, compiled by economists Karl Case and Robert
Shiller, lists average U.S. housing prices (in the form of a real, inflation-
adjusted index) from 1975 to 2010.Real House Real House Real House
Year Price Index Year Price Index Year Price Index
1975 104.4 1987 118.3 1999 119.5
1976 105.2 1988 122.5 2000 126.6
1977 110.5 1989 125.3 2001 133.5
1978 117.1 1990 121.0 2002 143.4
1979 120.5 1991 114.1 2003 154.5
1980 114.5 1992 111.5 2004 171.4
1981 109.0 1993 109.0 2005 191.0
1982 105.1 1994 109.3 2006 194.7
1983 105.4 1995 108.2 2007 181.1
1984 105.5 1996 107.6 2008 146.1
1985 107.5 1997 108.6 2009 130.3
1986 112.7 1998 113.4 2010 128.2178 Chapter 4 Estimating and Forecasting Demandc04EstimatingandForecastingDemand.qxd 9/5/11 5:49 PM Page 178