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TIME-SERIES ANALYSIS
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TIME-SERIES ANALYSIS
When data is collected, observed or recorded at successive intervals
of time, such data are referred to as Time Series i.e a Time Series
consists of statistical data in chronological order (in accordance with
time).
In time series analysis, we analyze the past behavior of a variable in
order to predict its future behavior.
When we observe numerical data at different points of time, the set
of observations are known as Time Series.
Time series analysis is one quantitative method which is used to
determine patterns in the data collected over regular intervals of time.
We project these patterns to arrive at an estimate to cope up with
uncertainty about the future.
Ex. Data of production, sales, imports etc. at different points of time.
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series.
COMPONENTS OF
TIME SERIES
1.
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Secular Trend
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2.
Seasonal Variations
SV are the fluctuations which completes the whole sequence of
change within the span of a year and tend to be repeated year after
year.
When a repetitive pattern is observed over some time horizon, the
series is said to have seasonal behavior.
Seasonal effects are usually associated with calendar or climatic
changes.
It includes any kind of variation which is of periodic natures &
whose repeating cycles are of relatively short durations.
SV can be because of:- Climate and weather conditions
- Increase in no of flu cases in winters
- Customs, traditions & habits.
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3. Cyclical Variations
These refers to the recurrent variations in time series that usually last
longer than a year and are regular.
Cyclical fluctuations are long term movements that represent
consistently recurring rises and declines in activity.
Most common Example: Business cycles. The time between hitting
peaks or falling to low points is at least one year or could be more.
4. Irregular Variations
Refers to variations in business activities which do not repeat in a
definite pattern.
These are variations caused by unpredictable factors like sudden
political instability, earthquakes, strikes, wars etc.
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METHODS OF
MEASUREMENTS
1.
2.
3.
4.
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:
:
:
Y Na bX
XY aX bX 2
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Ques 1. Determine the trend line which best fits the following data and also find the
trend values for the given years.
Year
Sales
(in Rs. 000)
2000
35
2001
56
2002
79
2003
80
2004
40
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Sol.
Year
Sales
(in Rs. 000):
(Y)
Deviations from
middle year:
(X), i.e. 2002
2000
35
-2
2001
56
-1
2002
79
2003
80
2004
40
Y =
X= 0
X2
X2=
XY
Trend
values
Yc
XY=
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Ques 2. Given below are the figures of production (in lakh kg.) of a sugar factory.
Fit a straight line trend by the least square method and tabulate the trend. Also
estimate the trend for the year 2006.
Year
Production
1999
40
2000
45
2001
46
2002
42
2003
47
2004
50
2005
46
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Sol.
Year
Production
(Lac Kgs.):
(Y)
Deviations from
middle year:
(X), i.e. 2002
1999
40
-3
2000
45
-2
2001
46
-1
2002
42
2003
47
2004
50
2005
46
Y =
X= 0
X2
X2=
XY
Trend
values
Yc
XY=
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Ques 3. Fit a straight line trend by the method of least squares to the following
data. Assuming that the same rate of change continues what would be the
predicted earnings for the year 1980?
Year
Earnings
(Rs. cr.)
1981
38
1982
40
1983
65
1984
72
1985
69
1986
60
1987
87
1988
95
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Sol.
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Year
Earnings (Rs.
cr.):
(Y)
Deviations from
middle year:
i.e. 1984.5
1981
38
-3.5
1982
40
-2.5
1983
65
-1.5
1984
72
-0.5
1985
69
0.5
1986
60
1.5
1987
87
2.5
1988
95
3.5
N=8
Y =
X= 0
X2
XY
X2=
XY=
Trend values
Yc
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Qs 4. From the data given below fit a straight line trend by the method of least
squares and find the trend values. Calculate the estimated milk consumption for
the year 1997, assuming same trend continues.
Year
Milk
consumption
(million litres)
1988
102.3
1989
101.9
1990
105.8
1991
112.0
1992
114.8
1993
118.7
1994
124.5
1995
129.9
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Sol.
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Year
Milk
consumption
(mln. Lts) :
(Y)
Deviations
from middle
year:
i.e. 1991.5
1988
102.3
-3.5
1989
101.9
-2.5
1990
105.8
-1.5
1991
112.0
-0.5
1992
114.8
0.5
1993
118.7
1.5
1994
124.5
2.5
1995
129.9
3.5
N=8
Y =
X= 0
Multiplying
deviations by 2
(X)
X2
X2=
XY
XY=
Trend
values
Yc
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Qs 5. The following data show the experience of machine operators and their
performance ratings as given by the number of good parts turned out per 100
pieces.
Operator
experience
Performance
Rating
16
87
12
88
18
89
68
78
10
80
75
12
83
Develop a linear trend for this data and estimate the probable performance if an
operator has 10 years experience.
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Sol.
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Operator
experience
(X)
Performance
Rating
(Y)
16
87
12
88
18
89
68
78
10
80
75
12
83
X=
Y =
X2
X2=
XY
XY=
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