RADHAMANI VISHAL & NABHONIL

INTRODUCTION
The desire to forecast the future is as old as the

human race - older if you allow that animals also form anticipations of what the future may bring, a predator may try to predict where the prey will runIn ancient times, people relied on prophets, soothsayers, and crystal balls. But today we have computers and with them an impressive, everexpanding array of quantitative capabilities to predict.

WHAT DOES TIME-SERIES MEAN?

A time series is a sequence of data points, measured typically at successive points in time spaced at uniform time intervals. Time series is a set of measurements of a variable that are ordered through time Time series analysis comprises methods for analyzing time series data in order to extract meaningful statistics and other characteristics of the data The time series analysis method is quite accurate where future is expected to be similar to past.

DIFFERENCE WITH REGRESSION ANALYSIS

Time series Analysis Time series forecasting is the use of a model to predict future values based on previously observed values. Regression Analysis Regression analysis is often employed in such a way as to test theories that the current value of one time series affects the current value of another time series. Regression analysis cannot explain seasonal and cyclical effects.

It shows or suggests periodicity of a data like seasonal and cyclical effects.

A TYPICAL TIME-SERIES GRAPH

The yearly sunspot numbers between 1749 to 1930 .

COMPONENTS OF TIME SERIES

SECULAR TREND CYCLICAL VARIATIONS SEASONAL VARIATIONS IRREGULAR VARIATIONS

SECULAR TREND
A time-series which displays a steady tendency of either upward or downward movement in the average (or mean) value of the forecast variable (let us say y) over a long period of time is called Trend. If the values of a variable remain stationery over several years then we can say that there is no trend in that time series. Examples1. Sales of ambassador car is going down over the last few years so ,we can say that sales of ambassador car is showing a Declining trend. 2. We find that over the last few years the sales of bike has increased. so, we can say that the sales of bike is showing an Upward Trend.

14000 12000 10000

6000

4000
2000 2007 2008 2009 2010 2011 2012

Units

10000

Upward trend of sales of bike in Jamshedpur

8000

6000 4000 2000

2000

2001

2002

2003

2004 2005

2006

2007

years

CYCLICAL VARIATION
Cyclical variations are long-term movements that represent consistently recurring rises and declines in activity. for example- Business Cycle, it consists of the recurrence of the up and down movements of business activity

prosperity Economic activities

Prosperity or boom

depression time Cyclical Variation(Business cycle)

SEASONAL VARIATION
Seasonal variations are those periodic movements in business activity which occur regularly every year. Since these variations repeat during a period of twelve months so, they can be predicted fairly accurately.
for example- Sales of woolen cloths goes up in every winter season than any other season .The time series graph of sales of woolen cloths touches its peak in every winter season.We have shown this with the help of a time series graph.

Sales of woolen cloths in winter season

500000 400000 30000o 200000 100000 10

2004

05

06

07

08

IRREGULAR VARIATION
Irregular variations refer to such variations in business activity which do not repeat in a definite pattern. In these type of variations the pattern of the variable is unpredictable. For example- Suppose due to strike by workers of car manufacture company TOTOYA in 2012 the production Of the company went down. The strike here act as a Irregular factor.

500000 400000 300000 200000 100000

2006

07

08

10

11

12

sales

Sales of PEPSI and COCA-COLA(after research)

14 PEPSI 12 10

It has been found

8
6 4 2 COCA-COLA years

that the sales of PEPSI has risen irregularly ,and also the sales of COCACOLA has taken a deep irregular surge downwards ,as a result of the research which is an unpredictable factor.

2011

2012

2013

CAUSES OF COMPONENTS OF TIME SERIES

If we talk about commodities, Secular Trend is

affected by prices, productions and sales of the commodity as well as the population of the area.
Timing is the most important factor which affect

the Cyclical Variations.

Seasonal Variations are caused by climate and

weather conditions, customs, festivals and habits.

Irregular Variations are caused by unpredictable factors like natural disasters (earthquakes, floods, wars etc.).These are unpredictable and no one has control over it.

NEED OF TIME-SERIES ANALYSIS

Helpful in understanding past behaviour

By observing data over a period of time, one can easily understand what changes have taken place in the past, such analysis will be extremely helpful in knowing the past performances.
Example- Past exports figures of India can be studied to know the past behaviour of the export trends

Exports (00 crore Rupees)

10000

8000 YEAR 6000 2004-2005 2005-2006 4000 2000 2006-2007 2007-2008 2008-2009 EXPORTS(00 crore Rupees) 3753.40 4564.18 5717.79 6558.64 8407.55

2004-05 2005-06 2006-07 2007-08 2008-09

NEED OF TIME-SERIES ANALYSIS

Helpful in planning future operations-

Knowledge of the past can tell us about the future .if a trend is repeating over a sufficient long period of time then we can predict for future, so with the help of time series we can predict an unknown value of the series
Example- The time-series graph of profit earned by TATA STEEL LTD. Suggests that ,it has a steady upward trend over the last few years and with the help of last few years data, we can predict more or less its profit for the coming years.

Profits earned by Tata Steel Ltd.( crore rupees)

14000

12000
10000 8000 6000 4000 2000 years 2008-09 Profits(cr Rs) 6000

2009-10
2010-11 2011-12 2012-13

7800
9900 11000 13000

2008-09 2009-10 2010-11 2011-12 2012-13

NEED OF TIME-SERIES ANALYSIS

Helpful in evaluating current accomplishments-

Actual performances can be compared with the expected performance and the cause of the variations analysed
Example-Accessories firm, Rayban Sunglasses decided to sell 9000 sunglasses in the month of May 2012.But could sell sunglasses to the unit of 8000 only. It was later found that during the month of May ,due to less heat and low temperature, less number of sunglasses were demanded.

Sales of RAYBAN Sunglasses till June 2012

Months Jan Feb Mar

Units(000) 5 5.8 6.5 7.6

Units ( in thousands)

Apr

10
9 8

May

7
6 5

Target sales
Actual Sales

Jan

Feb

Mar

Apr

May

Jun

NEED OF TIME-SERIES ANALYSIS

Facilitates comparison-

Different time-series can be compared and important conclusions can be drawn from this with the help of this we can take decisions.

Example-Comparative GDP (per capita) growth index of India along with China facilitates users to chart out useful conclusions.