CASE STUDY CHALLENGE

Time Series Analysis: Sales Forecasting

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

Answer the following:

(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.

— OR —

(b) Fit a straight-line trend by the method of least squares for the following data:

Year 2004 2005 2006 2007 2008 2009 2010
Profit (₹ ‘000) 114 130 126 144 138 156 164
[2]
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