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Question
Solve the following problem:
Following data shows the number of boxes of cereal sold in years 1977 to 1984.
| Year | 1977 | 1978 | 1979 | 1980 | 1981 | 1982 | 1983 | 1984 |
| No. of boxes in ten thousand | 1 | 0 | 3 | 8 | 10 | 4 | 5 | 8 |
Fit a trend line to the above data by graphical method.
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Solution
Taking year on X-axis and number of boxes on Y-axis, we plot the points for number of boxes corresponding to years. Joining these points, we get the graph of the time series. We fit the trend line as shown in the following graph.
RELATED QUESTIONS
Obtain the trend line for the above data using 5 yearly moving averages.
Fit a trend line to the data in Problem 4 above by the method of least squares. Also, obtain the trend value for the index of industrial production for the year 1987.
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?
The simplest method of measuring trend of time series 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 :
All the three methods of measuring trend will always give the same results.
Solve the following problem :
Obtain trend values for the following data using 5-yearly moving averages.
| Year | 1974 | 1975 | 1976 | 1977 | 1978 | 1979 | 1980 | 1981 | 1982 |
| Production | 0 | 4 | 9 | 9 | 8 | 5 | 4 | 8 | 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 data in Problem 10 using 3-yearly moving averages.
Solve the following problem :
Following table shows the all India infant mortality rates (per ‘000) for years 1980 to 2010.
| Year | 1980 | 1985 | 1990 | 1995 | 2000 | 2005 | 2010 |
| IMR | 10 | 7 | 5 | 4 | 3 | 1 | 0 |
Fit a trend line to the above data by graphical method.
Choose the correct alternative:
Moving averages are useful in identifying ______.
The complicated but efficient method of measuring trend of time series is ______
The simplest method of measuring trend of time series is ______
State whether the following statement is True or False:
Least squares method of finding trend is very simple and does not involve any calculations
Following table shows the amount of sugar production (in lac tons) for the years 1971 to 1982
| Year | 1971 | 1972 | 1973 | 1974 | 1975 | 1976 |
| Production | 1 | 0 | 1 | 2 | 3 | 2 |
| Year | 1977 | 1978 | 1979 | 1980 | 1981 | 1982 |
| Production | 4 | 6 | 5 | 1 | 4 | 10 |
Fit a trend line by the method of least squares
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
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 |
Following table shows the all India infant mortality rates (per ‘000) for years 1980 to 2010
| Year | 1980 | 1985 | 1990 | 1995 |
| IMR | 10 | 7 | 5 | 4 |
| Year | 2000 | 2005 | 2010 | |
| IMR | 3 | 1 | 0 |
Fit a trend line by the method of least squares
Solution: Let us fit equation of trend line for above data.
Let the equation of trend line be y = a + bx .....(i)
Here n = 7(odd), middle year is `square` and h = 5
| Year | IMR (y) | x | x2 | x.y |
| 1980 | 10 | – 3 | 9 | – 30 |
| 1985 | 7 | – 2 | 4 | – 14 |
| 1990 | 5 | – 1 | 1 | – 5 |
| 1995 | 4 | 0 | 0 | 0 |
| 2000 | 3 | 1 | 1 | 3 |
| 2005 | 1 | 2 | 4 | 2 |
| 2010 | 0 | 3 | 9 | 0 |
| Total | 30 | 0 | 28 | – 44 |
The normal equations are
Σy = na + bΣx
As, Σx = 0, a = `square`
Also, Σxy = aΣx + bΣx2
As, Σx = 0, b =`square`
∴ The equation of trend line is y = `square`
Obtain trend values for data, using 3-yearly moving averages
Solution:
| Year | IMR | 3 yearly moving total |
3-yearly moving average (trend value) |
| 1980 | 10 | – | – |
| 1985 | 7 | `square` | 7.33 |
| 1990 | 5 | 16 | `square` |
| 1995 | 4 | 12 | 4 |
| 2000 | 3 | 8 | `square` |
| 2005 | 1 | `square` | 1.33 |
| 2010 | 0 | – | – |
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 |
Following table shows the amount of sugar production (in lakh tonnes) for the years 1931 to 1941:
| Year | Production | Year | Production |
| 1931 | 1 | 1937 | 8 |
| 1932 | 0 | 1938 | 6 |
| 1933 | 1 | 1939 | 5 |
| 1934 | 2 | 1940 | 1 |
| 1935 | 3 | 1941 | 4 |
| 1936 | 2 |
Complete the following activity to fit a trend line by method of least squares:
The complicated but efficient method of measuring trend of time series is ______.
The following table shows gross capital information (in Crore ₹) for years 1966 to 1975:
| Years | 1966 | 1967 | 1968 | 1969 | 1970 |
| Gross Capital information | 20 | 25 | 25 | 30 | 35 |
| Years | 1971 | 1972 | 1973 | 1974 | 1975 |
| Gross Capital information | 30 | 45 | 40 | 55 | 65 |
Obtain trend values using 5-yearly moving values.
The publisher of a magazine wants to determine the rate of increase in the number of subscribers. The following table shows the subscription information for eight consecutive years:
| Years | 1976 | 1977 | 1978 | 1979 |
| No. of subscribers (in millions) |
12 | 11 | 19 | 17 |
| Years | 1980 | 1981 | 1982 | 1983 |
| No. of subscribers (in millions) |
19 | 18 | 20 | 23 |
Fit a trend line by graphical method.
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`
