COMPILATION OF QUESTIONS ON

FORECASTING
Regression, Correlation and Time-series

Dr. Adibah Jamaluddin

F5 Q3 June 2012

trend

SV

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T7 Q1 Jun 2004
Matthews’ Western division anticipates steadily growing demand for its products, subject to some seasonal variation. Recently
it has employed the services of a statistician to help forecast sales. The following extracts from the statistician’s report are
available.

(d) In the context of a time series analysis of sales, explain the meaning of the terms ‘trend’ and ‘seasonal variation’.
(4 marks)
(e) Use the information provided by the statistician to forecast sales in cases for the last quarter of 2004 for the
Western division. (5 marks)

1 2 3 4
5 6 7 8
9 10 11 12
13 14 15 16

y = 1500 + 60x
y = 1500 + 60(16)
y = 2460
+ 50 = 2510

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T7 Q3 Jun 2005
Case plc is preparing its budgets for the coming year and is attempting to forecast its sales. Total industry sales for this type
of product for the current year and the previous four years are given below.
Year Sales
$ 000
2000 175,000
2001 193,025
2002 211,225
2003 229,250
2004 247,100

An index of price level movements, appropriate to Case plc’s industry for the same periods is as follows.
Year Price level index
2000 100
2001 103
2002 107
2003 110
2004 112
2005 (forecast) 113
Assume that it is now the end of 2004.

Required:
(a) Restate the industry sales figures for each of the above five years (2000 to 2004) to 2005 forecast price levels
using the price level index. (5 marks)

(c) Use the high-low technique to estimate a formula for industry sales expressed in 2005 price levels and use the
formula to forecast industry sales revenue for 2005. (6 marks)

(d) Suggest TWO factors, other than past trends in industry sales, which Case plc should take into account when
forecasting its own sales. (4 marks)

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T7 Q2 Jun 2010
Vito Co wishes to analyse the behaviour of its costs. The following information is available.
Year Average index Output Total cost
value * (units) ($)
2007 150 1,500,000 12,450,000
2008 180 1,600,000 15,840,000
2009 70 1,700,000 6,510,000
2010 (forecast) 80 1,800,000 7,840,000
* these are values of a price index appropriate to costs in Vito Co’s industry

Required:
(a) Use the industry price index to restate Vito Co’s total costs for each year in terms of 2010 price levels. (4 marks)

(c) Use the high low technique to estimate the fixed and variable elements of Vito Co’s total cost expressed in 2010
price levels. (4 marks)

(d) Forecast Vito Co’s total cost for 2011 when output is forecast to be 2,000,000 units and the industry price index
is expected to rise to 95. (2 marks)

(e) The company accountant has produced the following component bar chart analysing Vito Co’s sales revenue over its
three markets, 1, 2 and 3.

Required:
Identify three trends in Vito Co’s sales revenue apparent from the bar chart. (6 marks)

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BPP PRK FMA Aug 2021

y = 20 - 0.25(12)
y = 17

(11 x 157) - (12 x 42) / sqroot ((11 x 46) - (42^2))

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