Case Study – 3 When observed over a long period of time, a time series data can predict trends that can forecast increase or decrease or stagnation of a variable under consideration. Such analytical studies can benefit a business for forecasting or prediction of future estimated sales or production. The table below shows the sale of an item in a district during 1996 – 2001 : | Year : | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | |---|---|---|---|---|---|---| | Sales (in lakh ₹) : | 6.5 | 5.3 | 4.3 | 6.1 | 5.6 | 7.8 | Based on the above information, answer the following questions : (i) Determine the equation of the straight-line trend. [2] (ii) (a) Tabulate the trend values of the years and also compute expected sales trend for the year 2002. [2] OR (b) Fit a straight-line trend by the method of least squares for the following data : [2] | Year : | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | |---|---|---|---|---|---|---|---| | Profit (₹ '000) | 114 | 130 | 126 | 144 | 138 | 156 | 164 |
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Start your 14-day free trial to unlock the full solution →Coding time about the mid-year makes , so . This gives ; trend values rise from to and the 2002 forecast is lakh. The alternative dataset gives .
Least-squares straight-line trend . With the origin shifted to the middle year so , the normal equations give and .
(i) Six years (even count) origin at mid-point , unit year, so .
| Year | Sales | |||
|---|---|---|---|---|
| 1996 | 6.5 | 25 | ||
| 1997 | 5.3 | 9 | ||
| 1998 | 4.3 | 1 | ||
| 1999 | 6.1 | 1 | ||
| 2000 | 5.6 | 9 | ||
| 2001 | 7.8 | 25 | ||
- (approx).
- (approx).
- Trend line: .
(ii)(a) Trend values for each coded :
| Year | Trend | |
|---|---|---|
| 1996 | ||
| 1997 | ||
| 1998 | ||
| 1999 | ||
| 2000 | ||
| 2001 |
- Forecast for 2002: coded , so .
- Expected sales for 2002 lakh. …
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