ANL317

Examination – January Semester 2017

Business Forecasting
Tuesday, 16 May 2017 10:00 am – 12:00 pm

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Time allowed: 2 hours

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INSTRUCTIONS TO STUDENTS:

1. This examination contains FIVE (5) questions and comprises THREE (3)
printed pages (including cover page).

2. You must answer ALL questions.

3. This is a closed book examination.

4. All answers must be written in the answer book.

At the end of the examination

Please ensure that you have written your examination number on each answer book used.

Failure to do so will mean that your work cannot be identified.

If you have used more than one answer book, please tie them together with the string
provided.

THE UNIVERSITY RESERVES THE RIGHT NOT TO MARK YOUR

SCRIPT IF YOU FAIL TO FOLLOW THESE INSTRUCTIONS.

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Examination – January Semester 2017
You must answer ALL questions. (Total 100 marks)

Question 1

If you are consulted to predict the monthly number of customers using Uber for the
next quarter, what should you do? Describe with detail the process of forecasting.
(20 marks)

Question 2

Your company has introduced a new flavour of jasmine tea to the market in January
2017. A sales manager would like to assess its impact on the sales of green tea.

(a) Discuss what forecast model can be used for this purpose. Justify with relevant
details.
(10 marks)

(b) Describe the data that should be collected for this modelling.
(4 marks)

(c) Evaluate whether there are any issues that should be addressed before making a
decision based on the forecasting model.
(6 marks)

Question 3

If the forecast is made by hierarchy, and the aggregate sale forecast is 80, the sale forecast
for region 1 and region 2 are 40 and 50 respectively. The sale forecast for two products
(A and B) under region 1 is 10 and 30, and under region 2 is 30 and 25 respectively.

(a) Draw a diagram (without reconciliation) with the forecasted values displaying the
hierarchy levels as described above.
(3 marks)

(b) Draw another diagram (without reconciliation) with the hierarchy levels of product
being broken down by region.
(3 marks)

(c) Describe the top-down reconciliation method and apply the method to the forecast
values in your diagram from part (a).
(6 marks)

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Examination – January Semester 2017
(d) Discuss one (1) advantage of forecasting using hierarchies. Justify your choice of
an appropriate reconciliation method.
(8 marks)

Question 4

(a) The series {𝑦𝑦𝑡𝑡 } is described by 𝑦𝑦𝑡𝑡 = 5 + 0.2𝑦𝑦𝑡𝑡−1 + 𝜀𝜀𝑡𝑡 . Identify the specific
ARIMA model. What is the mean of the series {𝑦𝑦𝑡𝑡 }?
(10 marks)

(b) The sample ACF and PACF plot of a series are given below. Compare the patterns
and judge which ARIMA model fit the series. Justify your conclusion.

(10 marks)

Question 5
1+0.2B
The dynamic regression model is estimated as 𝑦𝑦𝑡𝑡 = (1 − 0.3𝐵𝐵)𝑥𝑥𝑡𝑡−2 + 1−0.5𝐵𝐵 𝜀𝜀𝑡𝑡 . Solve
and get the expanded expression.
(20 marks)

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Examination – January Semester 2017