The following table shows the average monthly distance traveled (in billion miles) by vehicles on urban highways for five different years. Urban Highways - Average Monthly Distance Traveled by Vehicles (Billion Miles)
Years Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec
Year 1 4.22 5.32 5.21 5.12 4.92 4.49 4.55 4.49 4.44 4.39 4.37 4.35
Year 2 4.31 5.44 5.34 5.24 4.98 4.59 4.68 4.65 4.61 4.68 4.74 4.79
Year 3 4.38 5.51 5.41 5.36 4.98 4.63 4.71 4.78 4.82 4.88 4.85 4.89
Year 4 4.45 5.59 5.5 5.41 5.01 4.72 4.78 4.79 4.82 4.92 5.06 5.11
Year 5 4.51 5.65 5.62 5.49 5.12 4.8 4.88 4.82 4.95 5.12 5.22 5.44
a. Construct a time series plot. What type of pattern exists in the data?
b. Use a multiple regression model to develop an equation to account for seasonal effects and any linear trend in the data. To capture seasonal effects, use the dummy variables Jan = 1 if month is January, 0 otherwise; Feb = 1 if month is February, 0 otherwise; …; Nov = 1 if month is November, 0 otherwise; and create a variable t such that t = 1 for January of year 1, t = 2 for February of year 1, …, t = 60 for December of year 5.
c. Compute the forecast (in billion miles) for next three months based on the model developed in part a.