You collect employment data in a trade business over 60 months and wish to predict employment for the next

12 months. Because there is an overall curvilinear pattern to the data, you use trend analysis and fit a quadratic trend model. Because there is also a seasonal component, you save the fits and residuals to perform decomposition of the residuals (see Example of Decomposition). 1 2 3 4 5 6 Open the worksheet EMPLOY.MTW. Choose Stat > Time Series > Trend Analysis. In Variable, enter Trade. Under Model Type, choose Quadratic. Check Generate forecasts and enter 12 in Number of forecasts. Click Storage.

7 Check Fits (Trend Line), Residuals (detrended data), and Forecasts. Click OK in each dialog box. Session Window Output Trend Analysis for Trade

Data Length

Trade 60

NMissing 0

Fitted Trend Equation

Yt = 320.76 + 0.509*t + 0.01075*t**2

Accuracy Measures MAPE 1.7076 MAD 5.9566

MSD 59.1305 Forecasts

Period Forecast 61 62 63 64 65 66 67 68 69 70 71 72 391.818 393.649 395.502 397.376 399.271 401.188 403.127 405.087 407.068 409.071 411.096 413.142

Graph window output

Interpreting the results

The trend plot that shows the original data, the fitted trend line, and forecasts. The Session window output also displays the fitted trend equation and three Measures of Accuracy to help you determine the accuracy of the fitted values: MAPE, MAD, and MSD. The trade employment data show a general upward trend, though with an evident seasonal component. The trend model appears to fit well to the overall trend, but the seasonal pattern is not well fit. To better fit these data, you also use decomposition on the stored residuals and add the trend analysis and decomposition fits and forecasts (see Example of decomposition).

Measures of accuracy (time series analysis)

Use these statistics to compare the fits of different forecasting and smoothing methods. Minitab computes three measures of accuracy of the fitted model: MAPE, MAD, and MSD. The three measures are not very informative by themselves, but you can use them to compare the fits obtained by using different methods. For all three measures, smaller values generally indicate a better fitting model. Mean absolute percentage error (MAPE) Expresses accuracy as a percentage of the error. Because this number is a percentage, it may be easier to understand than the other statistics. For example, if the MAPE is 5, on average the forecast is off by 5%. Mean absolute deviation (MAD) Expresses accuracy in the same units as the data, which helps conceptualize the amount of error. Outliers have less of an affect on MAD than on MSD.

 Mean squared deviation (MSD) A commonly-used measure of accuracy of fitted time series values. Outliers have more influence on MSD than MAD. For example, you have sales data for 36 months and you would like to find a prediction model. You try two models: single exponential smoothing (SES) and linear trend, and get the following results: SES MAPE 8.1976 MAD 3.6215 MSD 22.3936 Linear Trend MAPE 6.9551 MAD 2.7506 MSD 11.2702

All three numbers are lower for the linear trend model compared to the single exponential smoothing method; therefore, the linear trend model seems to provide the better fit.