1. Using Minitab or equivalent software, fit an ARIMA(0,1, 0)(0,1,1)12 model to the data in Table 9-22. Do you think a constant term is required in the model? Explain.

2. Is the model suggested in Question 1 adequate? Discuss with reference to residual plots, residual autocorrelations, and the Ljung-Box chi-square statistics. If the model is not adequate, modify and refit the initial model until you feel you have achieved a satisfactory model.
3. Using the model you have developed in Question 2, generate forecasts for the funding requirements for the next 12 months.
The Air Finance Division is one of several divisions within United Parcel Service Financial Corporation, a wholly owned subsidiary of United Parcel Service (UPS). The Air Finance Division has the responsibility of providing financial services to the company as a whole with respect to all jet aircraft acquisitions. In addition, this division provides financing to independent outside entities for aviation purchases as a separate and distinct operation. Historically, the non-UPS financing segment of the Air Finance Division has provided a higher rate of return and greater fee income than the UPS segment; however, it is more costly to pursue.

TABLE 9-22 Year Jan. Feb Mar Apr. May Jun. Jul. Aug. Sep. ct Nov. Dec. 1989 16.2 16.7 18.7 18.8 20.6 22.5 23.3 23.8 22.3 22.3 22.1 23.6 1990 20.1 216 216 219 23.4 25.9 26.0 26.2 24.7 23.5 23.4 23.9 1991 200 20.4 20.9 21.6 23.2 25.6 26.6 26.3 23.7 22.2 22.7 23.6 1992 20.2 211 21.5 22.2 234 25.7 26.3 26.2 23.6 228 22.8 23.3 993 210 21.7 22.2 23.1 248 26.6 274 27.1 253 23.6 23.5 24.7 1994 21.2 22.5 22.7 23.6 25.1 27.6 28.2 27.7 25.7 24.3 23.7 24.9 1995 21.8 21.9 23.1 23.2 24.2 27.2 28.0 27.6 25.2 24.1 23.6 24.1 1996 20.7 22.0 22.5 23.6 25.2 27.6 28.2 28.0 26.3 25.9 25.9 27.1 1997 22.9 23.8 248 254 27.0 29.9 31.2 30.7 28.9 28.3 28.0 29.1 1998 25.6 26.5 27.2 27.9 29.4 318 32.7 32.4 30.4 29.5 29.3 30.3