Sales Forecasting using Trend Models.

ABC Corporation has collected quarterly sales data for the last five years, yielding the following sales figures (in thousands):

Year 1: Q1: 200, Q2: 220, Q3: 250, Q4: 300

Year 2: Q1: 230, Q2: 250, Q3: 270, Q4: 320

Year 3: Q1: 260, Q2: 280, Q3: 310, Q4: 360

Year 4: Q1: 290, Q2: 320, Q3: 350, Q4: 400

Year 5: Q1: 310, Q2: 340, Q3: 370, Q4: 450

ABC Corporation is looking to model its sales using a linear trend model. The model can be expressed as:

$Y_t = eta_0 + eta_1 t + eta_2 D + eta_3 S_t + eta_4 Q_t + ext{ε}$, where:

• $Y_t$ = Sales for period $t$
• $D$ = Dummy variable for trend direction
• $S_t$ = Seasonal indicators
• $Q_t$ = Dummy variables for quarters
• $ ext{ε}$ = Error term

Upon estimation of the model, the coefficients were found to be:

• $eta_0 = 150$
• $eta_1 = 15$
• $eta_2 = 5$
• $eta_3 = 3$
• $eta_4 = 20$

If the company wants to forecast sales for Q2 of Year 6, which of the following statements about the predicted sales value is true?