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Quantitative Methods

Quantitative Methods

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Published by: rajvirsandhu8 on Apr 21, 2010
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10/28/2015

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Contents

Page

Introduction

130

A. Structure of a Time Series

130

Trend

131

Seasonal Variations

132

Cyclical Fluctuations

133

Irregular or Random Fluctuations

134

Summary

134

B. Calculation of Component Factors for the Additive Model

135

Trend

135

Seasonal Variation

141

Deseasonalised Data and Residual

143

C. Multiplicative Model

143

Example of a Multiplicative Model

144

D. Forecasting

148

Assumptions

148

Methods of Forecasting

148

D. The Z Chart

150

Summary

152

130 Time Series Analysis

© ABE and RRC

INTRODUCTION

Businesses and governments use statistical analysis of information collected at regular
intervals over extensive periods of time to plan future policies. For example, sales values or
unemployment levels recorded at yearly, quarterly or monthly intervals are examined in an
attempt to predict their future behaviour. Such sets of values observed at regular intervals
over a period of time are called time series.

The analysis of this data is a complex problem as many variable factors may influence the
changes. The first step is to plot the observations on a scattergram, which differs from those
scattergrams we have considered previously as the points are evenly spaced on the time
axis in the order in which they are observed, and the time variable is always the independent
variable. This scattergram gives us a good visual guide to the actual changes, but is of very
little help in showing the component factors causing these changes or in predicting future
movements of the dependent variable.

Statisticians have constructed a number of mathematical models to describe the behaviour
of time series, and several of these will be discussed in this study unit.

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