Time series analysis 

is used to understand how the value of

some variable changes over time.

Example 1: Retail Sales

Retail stores often use time series analysis to analyze how their
total sales is trending over time.

Time series analysis is particularly useful for analyzing monthly,

seasonal, and yearly trends in sales.
This allows retail stores to be able to more accurately predict
what their sales will be during an upcoming period and be able
to more accurately predict how much inventory and staff they’ll
need during different periods of the year.
Example 2: Stock Prices
Time series analysis is also used frequently by stock traders so
they can gain a better understanding of the patterns in various
stock prices.
Time series plots in particular are helpful because they allow
stock analysts and traders to understand the trend and
direction of a certain stock price.
Example 3: Weather
Time series analysis is also used frequently by weatherman to
predict what the temperatures will be during different months
and seasons throughout the year.

Example 4: Heart Rate

Time series analysis is also used in the medical field to monitor
the heart rate of patients who may be on certain medications to
make sure that heart rate doesn’t fluctuate too wildly during any
given time of the day.
Example 5: Subscribers
Time series analysis is often used by online publications to
analyze trends in the total number of subscribers from one 
year to the next.
Time series plots can be particularly useful for identifying
whether or not growth in the number of subscribers is
increasing, decreasing, or hitting a plateau.

Basic Structures

The following two structures are considered for basic decomposition

models:

1. Additive: xt = Trend + Seasonal + Random

2. Multiplicative: xt = Trend * Seasonal * Random
The “Random” term is often called “Irregular” in software for
decompositions.

How to Choose Between Additive and Multiplicative Decompositions

 The additive model is useful when the seasonal variation is relatively

constant over time.
 The multiplicative model is useful when the seasonal variation
increases over time.