Time Series Analysis I

WEEK EIGHT

This worksheet relates to sections 15.1-15.4 of the text

book (Statistics for Managers 4th Edition).

Time series analysis is a very important

branch of statistics, particularly for
economists. Much well-known and
important economic data, such as GDP
and unemployment, is time series data.

DISCUSSION QUESTIONS –
these will be covered in the quick quiz

1. What is time series data? What are some examples you may have
encountered in everyday life?

2. Explain the main components of time series data. Which of these would be
most prevalent in data relating to unemployment?

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 MULTIPLE CHOICE QUESTIONS

1. An overall upward or downward pattern in an annual time series would

be contained in which component of the times series

(a) trend
(b) cyclical
(c) irregular
(d) seasonal Final Exam, Nov 2004

2. Which of the following statements about the method of exponential

smoothing is not true?

(a) it gives greater weight to more recent data

(b) it can be used for forecasting
(c) it uses all earlier observations in each smoothing calculation
(d) it gives greater weight to the earlier observations in the series
Final Exam, Nov 2004

3. When using exponentially weighted moving average for the purposes of

forecasting rather than smoothing, the smoothed value for the period t
becomes for the period

(a) t-1
(b) t
(c) t+1
(d) none of the above
Final Exam, Nov 2005

4. The following table contains the number of complaints received in a

department store for the first 6 months of last year.

Month Complaints
Jan 36
Feb 45
Mar 81
Apr 90
May 108
Jun 144

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If a 3-term moving average is used to smooth this series, what would be
the second calculated term?

(a) 36
(b) 40.5
(c) 54
(d) 72
Final Exam, Nov 2005

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 CALCULATION QUESTIONS

1. Exponential smoothing is being used on an annual time series

concerning total revenues (in millions of constant 1995
dollars). Answer the following if a smoothing coefficient of W
= 0.20 is used and the exponentially smoothed series for the
year 1999 is expressed as E 1 9 9 9 = (0.2)(12.1) + (0.80)(0.94).

(a) What is the smoothed value of this series in 1999?

(b) What is the smoothed value of this series in 2000 if the

observed value of the series in that year was 11.5 millions
of constant 1995 dollars?

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2. The least-squares trend line for an annual time series
containing 40 observations (from 1961 to 2000) on real net
sales (in billions of constant 1995 dollars) is:

Y = 1.2 + 0.5X i

(a) Interpret the Y intercept, b 0 , in this linear trend model.

(b) Interpret the slope, b 1 , in this linear trend model.

(c) What is the fitted trend value for this time series on
real net sales for the 10 t h year?

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 EXTRA PRACTICE QUESTION
– it is unlikely you will get through this in your PASS session

Suppose the following data represent total revenues (in millions of

constant 1995 dollars) by a car rental agency over the 11 year
period 1990 to 2000:

4.0 5.0 7.0 6.0 8.0 9.0 5.0 2.0 3.5 5.5 6.5

Compute the 5-year moving averages for this annual time series.

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notes

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