Chandigarh Group of Colleges,Jhanjeri

Master of Business Administration

MBA-II Semester
MBA 201-18
Business Analytics for Decision
Making
Topic: Time series-Methods of Time
Series
Dr. Rajinder Kaur Bhogal
Associate Professor
EMAIL:-rajinder.bilkhu@gmail.com

CAMPUS: JHANJERI, MOHALI

 Objective

• The objective of this paper is to understanding of the

research process, tools and techniques in order to
facilitate managerial decision making.

Chandigarh Group of colleges,Jhanjeri

 MBA Batch 2018 onwards
MBA 201-18
Business Analytics for Decision Making
Unit I
•CO1: Explain fundamental concepts of data collection,
classification and tabulation. Understanding (Level2)

•Introduction to Statistics: Meaning, Importance, Applications of inferential

statistics in managerial decision making.
• Collection of Data: concept of primary data and secondary data, sources of
primary data and secondary data,
•Classification and Tabulation of Data: Concept and types of classification,
construction of frequency distributions, tabulation of data: role of tabulation,
parts of table, rules of tabulation, review of table, types of table.
•Sampling: Concept, definitions, census and sampling, probability and non-
probability methods of sampling, relationship between sample size and
errors.
• 
 Unit II

CO2: Outline the concepts of sampling and sampling distribution .

Understanding (Level2)
• Sampling Distributions: Concept and standard error.

CO3: Apply statistical methods for Hypothesis Testing. Applying (level 3)

• Hypothesis Testing: Formulation of hypothesis, procedure of hypothesis
testing, errors in testing of hypothesis, tests of significance for large
samples, tests of significance for small samples, application of t-test, Z-test,
F-test and Chi-square test and Goodness of fit, ANOVA.

 Techniques of association of attributes.

 
 Unit-III

• CO4:Illustrate the concept of multiple correlation and

multiple regression in business forecasting

• Business Forecasting: Introduction, Role of forecasting

in business, Steps in forecasting and methods of
forecasting.
• Correlation: Partial and Multiple correlation.
• Regression Analysis: Multiple regression analysis,
Testing the assumptions of regression: multicolinearity,
heteroscedasticity and autocorrelation.
 Unit IV
• CO5: Make use of Index Number method in managerial decision
making. Applying (Level 3)
• Index Number: Definition, importance of index number in managerial
decision making, methods of construction, tests of consistency, base
shifting, splicing and deflation, problems in construction.
• CO6:Apply the time series method to predict the future of sales in a
concern.

• Time Series Analysis: Meaning, component and, methods of time

series analysis. Trend analysis: Least square method, linear and non
linear equations, applications of time series in business decision
making.
Course Outcomes: Upon completion of this course, students will be able to:

SNO DESCRIPTION BLOOM’S TAXONOMY

LEVEL
CO1 Explain fundamental concepts of data collection, classification and tabulation Understanding
(Level 2)
CO2 Outline the concepts of sampling and sampling distribution Understanding
(Level 2)
CO3 Apply statistical methods for Hypothesis Testing .Applying
(level 3)

CO4 Illustrate the concept of multiple correlation and multiple regression in business Understanding
forecasting (Level 2)
CO5 Make use of Index Number method in managerial decision making Applying (Level 3)

CO6 Apply the time series method to predict the future of sales in a concern. Applying
(level 3)

Chandigarh Group of colleges,Jhanjeri

 Unit-4
• CO6:-Apply the time series method to predict the future
of sales in a concern.
• Time Series Analysis-Methods

--Dr RAJINDER KAUR BHOGAL

Learning objectives :-After completing this module the
students will be able to :-
•Decomposition of time series
•Methods-
•Free hand curve Method
•Semi Averages Method
•Moving Average Method
•Least Squares method
•A).Direct Method
•B).Short cut method
•Conclusion
•References
•Website
UNIT-4
Methods of Time Series Analysis
Time series Analysis:-Free Hand Method
 Free Hand Method
• In this method ,the given data are plotted on a graph
paper and the trend line is fitted to the data just by
inspecting the graph of the series.
• A Smooth free hand curve is drawn through the scatter
of the plotted points which appears to represent their
pattern of movement over time.
• As a rough guide, the line should be so drawn by the
statistician that it passes between the plotted points in
such a manner that the fluctuations in one direction are
approximately equal to those in the other direction.
Semi Average Method
 Semi Average Method

• The sale of a product in tons varied from Jan 2007 to

Dec 2007 in the following manner (total no of trends is
12)
• 280,300,280,280,270,240,230,230,220,220,210,
• 200
• Calculate semi averages to determine trend.
• First part 1650/6=275
• Second part =1310/6=218.3
Moving Average Method
A+b+c+d+e/5,b+c+d+e+f/5,c+d+e+f+g/
5
5-ODD Number
 `5-year, 7-year and 9-year moving averages
Example: Compute 5-year, 7-year and 9-year moving averages for
the following data

Years
1990 1991 1992 1993 1994 1995 1996 19997 1998 1999 2000

Values
2 4 6 8 10 12 14 16 18 20 22

Solution:

The necessary calculations are given below:

     5-Year Moving 7-Year Moving 9-Year Moving

Years Values Total Average Total Average Total Average

1990 2 — — — — — —
1991 4 — — — — — —
1992 6 30/5 6 — — — —
1993 8 40/5 8 56/7 8 — —
1994 10 50/5 10 70/7 10 90/9 10
1995 12 60/5 12 84/7 12 108/9 12
1996 14 70/5 14 98/7 14 126/9 14
1997 16 80/5 16 112/7 16 — -------

1998 18 90/5 18 — — — —
1999 20 — — — — — —
2000 22 — — — — — —
Moving average method (Even Period)
4 Yearly Moving average
Year Value MOVING AVERAGE CENTERED
1997 12
1998 18
-------------------(12+18+26+32)/4 =22
1999 26 ________________________________(22+29)/2 =25.5
-------------------(18+26+32+40)/4 =29
2000 32 ________________________________ (29+39.5)/2 =34.25
-------------------(26+32+40+60)/4 =39.5
2001 40 ________________________________ (39.5+52)/2 =45.75
-------------------(32+40+60+76)/4 =52
2002 60 ________________________________ (52+67.5)/2 =59.75
-------------------(40+60+76+94)/4 =67.5
2003 76 ________________________________ (67.5+82.5)/2=75
-------------------(60+76+94+100)/4 =82.5
2004 94 ________________________________ (82.5+94.5)/2=88.5
-------------------(76+94+100+108)/4 =94.5
2005 100 ________________________________ (94.5+100)/2=97.25
-------------------(94+100+108+98)/4 =100
2006 108 ________________________________ (100+99)/2=99.5
-------------------(100+108+98+90)/4 =99
2007 98
2008 90
Year Value CENTERED MOVING AVERAGE
1997 12
1998 18
1999 26 ------------- 25.5
2000 32 ------------- 34.25
2001 40 ------------- 45.75
2002 60 ------------- 59.75
2003 76 ------------- 75.0
2004 94 ------------- 88.5
2005 100 ------------97.25
2006 108 ------------99.5
2007 98
2008 90
Calculate four-yearly moving averages of number of
students studying in a higher secondary school in a
particular city from the following data.
Solution:
Computation of four- yearly moving averages.
 Least Square
Method(Linear Trend)
Least square method
• 1).Direct method
• 2).Short cut method
 1).Direct method

• Under direct method ,the starting year or year of origin of the

time series is taken as zero , next year as 1 and subsequent
years as 2,3,4,5 and so on.
• Secular Trend Line
• The secular trend line (Y) is defined by the following
equation:
• Formula:-
• Y=a+bX
• ΣY = na + b ΣX
• ΣXY = aΣX + bΣX2
Short cut method-least square method
 Short cut Method
• Under this method mid point in the time is taken as the
origin . With this values of other years will be found
accordingly, Such that negative values in the first half of
the series balance out the positive values in the second
half so that,
• To simplify the calculations, if the midpoint of the time
series is taken as origin, then the negative values in the
first half of the series balance out the positive values in
the second half so that ΣX = 0. In this case, the above
two normal equations will be as follows:
Short cut Method-formula
• ΣY = na
• ΣXY = bΣX2
• In such a case the values of a and b can be calculated as
under:
• Since ΣY = na
• a = ∑Yn
• Since, ΣXY = bΣX2
ΣXY /bΣX2= b
Least Square Method(Non -Linear Trend)
Time Series Analysis is used for many
applications such as:
• Economic Forecasting
• Sales Forecasting
• Budgetary Analysis
• Stock Market Analysis
• Yield Projections
• Process and Quality Control
• Inventory Studies
• Workload Projections
• Utility Studies
• Census Analysis
 Techniques
• There are many methods of model fitting including the following:
• Box-Jenkins ARIMA models
• Box-Jenkins Multivariate Models
• Holt-Winters Exponential Smoothing (single, double, triple)
The user's application and preference will decide the selection of the
appropriate technique. It is beyond the realm and intention of the authors
of this handbook to cover all these methods.
• The overview presented here will start by looking at some basic
smoothing techniques :
• Averaging Methods
• Exponential Smoothing Techniques.
 Conclusion
• Time series analysis accounts for the fact that data points
taken over time may have an internal structure (such as
autocorrelation, trend or seasonal variation) that should
be accounted for.
 References/Text books
• Quantitative Techniques, by CR Kothari, Vikas
publication .
• Fundamentals of Statistics by SC Gupta Publisher Sultan
Chand .
• Quantitative Techniques in management by N.D. Vohra
Publisher: Tata McGraw hill.
• Business statistics T.R JAIN S.C AGGARWAL Global
Publication .
• Research Methodology CR Kothari
Websites
• https://byjus.com/physics/hypothesis/
• https://www.scribbr.com/statistics/type-i-and-type-ii-err
ors
/
Topic to be covered in the next
lecture
Thank You