Worked Examples · Example 7
Q.
Fit a straight-line trend by the method of least squares to the following data on a company's sales (Rs lakh) for 2019-2022.
| Year | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|
| Sales | 40 | 45 | 54 | 61 |
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Start your 14-day free trial to unlock the full solution →Step 1 — set up the coding table using the "" method (since is even, there is no single middle year; the two central years 2020 and 2021 are coded and , and the outer years and , so each unit of represents half a year):
| Year | Sales () | |||
|---|---|---|---|---|
| 2019 | 40 | -3 | -120 | 9 |
| 2020 | 45 | -1 | -45 | 1 |
| 2021 | 54 | 1 | 54 | 1 |
| 2022 | 61 | 3 | 183 | 9 |
| Total |
Step 2 — compute and :
Trend equation: , origin at the midpoint of 2020 and 2021, with each unit of equal to half a year.
Step 3 — trend values:
| Year | ||
|---|---|---|
| 2019 | -3 | |
| 2020 | -1 |
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