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Question
Choose the correct alternative:
Moving averages are useful in identifying ______.
Options
Seasonal component
Irregular component
Trend component
cyclical component
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Solution
Moving averages are useful in identifying trend component.
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RELATED QUESTIONS
Obtain the trend line for the above data using 5 yearly moving averages.
The following table shows the production of gasoline in U.S.A. for the years 1962 to 1976.
| Year | 1962 | 1963 | 1964 | 1965 | 1966 | 1967 | 1968 | 1969 | 1970 | 1971 | 1972 | 1973 | 1974 | 1975 | 1976 |
| Production (Million Barrels) |
0 | 0 | 1 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 8 | 9 | 10 |
i. Obtain trend values for the above data using 5-yearly moving averages.
ii. Plot the original time series and trend values obtained above on the same graph.
Choose the correct alternative :
Which of the following is a major problem for forecasting, especially when using the method of least squares?
Choose the correct alternative :
What is a disadvantage of the graphical method of determining a trend line?
Fill in the blank :
The method of measuring trend of time series using only averages is _______
Fill in the blank :
The complicated but efficient method of measuring trend of time series is _______.
State whether the following is True or False :
Moving average method of finding trend is very complicated and involves several calculations.
State whether the following is True or False :
Least squares method of finding trend is very simple and does not involve any calculations.
Solve the following problem :
The following table shows the production of pig-iron and ferro- alloys (‘000 metric tonnes)
| Year | 1974 | 1975 | 1976 | 1977 | 1978 | 1979 | 1980 | 1981 | 1982 |
| Production | 0 | 4 | 9 | 9 | 8 | 5 | 4 | 8 | 10 |
Fit a trend line to the above data by graphical method.
Solve the following problem :
Following table shows the amount of sugar production (in lac tonnes) for the years 1971 to 1982.
| Year | 1971 | 1972 | 1973 | 1974 | 1975 | 1976 | 1977 | 1978 | 1979 | 1980 | 1981 | 1982 |
| Production | 1 | 0 | 1 | 2 | 3 | 2 | 3 | 6 | 5 | 1 | 4 | 10 |
Fit a trend line to the above data by graphical method.
Solve the following problem :
Fit a trend line to data in Problem 4 by the method of least squares.
Obtain trend values for the following data using 4-yearly centered moving averages.
| Year | 1971 | 1972 | 1973 | 1974 | 1975 | 1976 |
| Production | 1 | 0 | 1 | 2 | 3 | 2 |
| Year | 1977 | 1978 | 1979 | 1980 | 1981 | 1982 |
| Production | 3 | 6 | 5 | 1 | 4 | 10 |
Solve the following problem :
Fit a trend line to the data in Problem 7 by the method of least squares.
Solve the following problem :
Obtain trend values for the data in Problem 7 using 4-yearly moving averages.
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Obtain trend values for data in Problem 10 using 3-yearly moving averages.
Solve the following problem :
Following table shows the number of traffic fatalities (in a state) resulting from drunken driving for years 1975 to 1983.
| Year | 1975 | 1976 | 1977 | 1978 | 1979 | 1980 | 1981 | 1982 | 1983 |
| No. of deaths | 0 | 6 | 3 | 8 | 2 | 9 | 4 | 5 | 10 |
Fit a trend line to the above data by graphical method.
Solve the following problem :
Obtain trend values for data in Problem 13 using 4-yearly moving averages.
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Following tables shows the wheat yield (‘000 tonnes) in India for years 1959 to 1968.
| Year | 1959 | 1960 | 1961 | 1962 | 1963 | 1964 | 1965 | 1966 | 1967 | 1968 |
| Yield | 0 | 1 | 2 | 3 | 1 | 0 | 4 | 1 | 2 | 10 |
Fit a trend line to the above data by the method of least squares.
The method of measuring trend of time series using only averages is ______
State whether the following statement is True or False:
Moving average method of finding trend is very complicated and involves several calculations
State whether the following statement is True or False:
Least squares method of finding trend is very simple and does not involve any calculations
The following table gives the production of steel (in millions of tons) for years 1976 to 1986.
| Year | 1976 | 1977 | 1978 | 1979 | 1980 | 1981 | 1982 | 1983 | 1984 | 1985 | 1986 |
| Production | 0 | 4 | 4 | 2 | 6 | 8 | 5 | 9 | 4 | 10 | 10 |
Obtain the trend value for the year 1990
Obtain the trend values for the data, using 3-yearly moving averages
| Year | 1976 | 1977 | 1978 | 1979 | 1980 | 1981 |
| Production | 0 | 4 | 4 | 2 | 6 | 8 |
| Year | 1982 | 1983 | 1984 | 1985 | 1986 | |
| Production | 5 | 9 | 4 | 10 | 10 |
Use the method of least squares to fit a trend line to the data given below. Also, obtain the trend value for the year 1975.
| Year | 1962 | 1963 | 1964 | 1965 | 1966 | 1967 | 1968 | 1969 |
| Production (million barrels) |
0 | 0 | 1 | 1 | 2 | 3 | 4 | 5 |
| Year | 1970 | 1971 | 1972 | 1973 | 1974 | 1975 | 1976 | |
| Production (million barrels) |
6 | 8 | 9 | 9 | 8 | 7 | 10 |
The following table shows the production of gasoline in U.S.A. for the years 1962 to 1976.
| Year | 1962 | 1963 | 1964 | 1965 | 1966 | 1967 | 1968 | 1969 |
| Production (million barrels) |
0 | 0 | 1 | 1 | 2 | 3 | 4 | 5 |
| Year | 1970 | 1971 | 1972 | 1973 | 1974 | 1975 | 1976 | |
| Production (million barrels) |
6 | 7 | 8 | 9 | 8 | 9 | 10 |
- Obtain trend values for the above data using 5-yearly moving averages.
- Plot the original time series and trend values obtained above on the same graph.
Obtain the trend values for the following data using 5 yearly moving averages:
| Year | 2000 | 2001 | 2002 | 2003 | 2004 |
| Production xi |
10 | 15 | 20 | 25 | 30 |
| Year | 2005 | 2006 | 2007 | 2008 | 2009 |
| Production xi |
35 | 40 | 45 | 50 | 55 |
Complete the following activity to fit a trend line to the following data by the method of least squares.
| Year | 1975 | 1976 | 1977 | 1978 | 1979 | 1980 | 1981 | 1982 | 1983 |
| Number of deaths | 0 | 6 | 3 | 8 | 2 | 9 | 4 | 5 | 10 |
Solution:
Here n = 9. We transform year t to u by taking u = t - 1979. We construct the following table for calculation :
| Year t | Number of deaths xt | u = t - 1979 | u2 | uxt |
| 1975 | 0 | - 4 | 16 | 0 |
| 1976 | 6 | - 3 | 9 | - 18 |
| 1977 | 3 | - 2 | 4 | - 6 |
| 1978 | 8 | - 1 | 1 | - 8 |
| 1979 | 2 | 0 | 0 | 0 |
| 1980 | 9 | 1 | 1 | 9 |
| 1981 | 4 | 2 | 4 | 8 |
| 1982 | 5 | 3 | 9 | 15 |
| 1983 | 10 | 4 | 16 | 40 |
| `sumx_t` =47 | `sumu`=0 | `sumu^2=60` | `square` |
The equation of trend line is xt= a' + b'u.
The normal equations are,
`sumx_t = na^' + b^' sumu` ...(1)
`sumux_t = a^'sumu + b^'sumu^2` ...(2)
Here, n = 9, `sumx_t = 47, sumu= 0, sumu^2 = 60`
By putting these values in normal equations, we get
47 = 9a' + b' (0) ...(3)
40 = a'(0) + b'(60) ...(4)
From equation (3), we get a' = `square`
From equation (4), we get b' = `square`
∴ the equation of trend line is xt = `square`
