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Question
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 |
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Solution
| Year | Production | 5-Yearly Moving total |
5-yearly Moving average (Trend value) |
| 2000 | 10 | — | — |
| 2001 | 15 | — | — |
| 2002 | 20 | 100 | 20 |
| 2003 | 25 | 125 | 25 |
| 2004 | 30 | 150 | 30 |
| 2005 | 35 | 175 | 35 |
| 2006 | 40 | 200 | 40 |
| 2007 | 45 | 235 | 45 |
| 2008 | 50 | — | — |
| 2009 | 55 | — | — |
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| `sumx_t=68` | - | `sumu=0` | `sumu^2=60` | `square` |
The equation of trend 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=68,sumu=0,sumu^2=60,sumux_t=-44`
Putting these values in normal equations, we get
68 = 9a' + b'(0) ...(3)
∴ a' = `square`
-44 = a'(0) + b'(60) ...(4)
∴ b' = `square`
The equation of trend line is given by
xt = `square`
