1

ML1nCDS CI 1IML SLkILS

1IML SLkILS
1lme serles ls seL of daLa collecLed and arranged ln accordance of
Llme Accordlng Lo Croxton and Cowdon"A 1lme serles conslsLs of daLa
arranged chronologlcally" Such daLa may be serles of LemperaLure of
paLlenLs serles showlng number of sulcldes ln dlfferenL monLhs of year
eLc 1he analysls of Llme serles means separaLlng ouL dlfferenL
componenLs whlch lnfluences values of serles 1he varlaLlons ln Lhe
Llme serles can be dlvlded lnLo Lwo parLs long Lerm varlaLlons and
shorL Lerm varlaLlons Long Lerm varlaLlons can be dlvlded lnLo Lwo
parLs 1rend or Secular 1rend and Cycllcal varlaLlons ShorL Lerm
varlaLlons can be dlvlded lnLo Lwo parLs Seasonal varlaLlons and
lrregular varlaLlons


vA8lA1lCnS ln
1lML SL8lLS
LCnC 1L8M
vA8lA1lCnS
18Lnu
C?LlCAL
vA8lA1lCnS
SPC81 1L8M
vA8lA1lCnS
SLASCnAL
vA8lA1lCnS
l88LCuLA8
vA8lA1lCnS



HFTH00S F0R TlHF SFRlFS AtAlYSlS
ln buslness forecasLlng lL ls lmporLanL Lo analyze Lhe
characLerlsLlc movemenLs of varlaLlons ln Lhe glven Llme serles 1he
followlng meLhods serve as a Lool for Lhls analysls

1Methods for Measurement of Secu|ar 1rend
l lreehand curve MeLhod (Craphlcal MeLhod)
ll MeLhod of selecLed polnLs
lll MeLhod of semlaverages
lv MeLhod of movlng averages
v MeLhod of LeasL Squares

Methods for Measurement of Seasona| Var|at|ons
l MeLhod of Slmple Average
ll 8aLlo Lo 1rend MeLhod
lll 8aLlo Lo Movlng Average MeLhod
lv MeLhod of Llnk 8elaLlves

Methods for Measurement for Cyc||ca| Var|at|ons

4Methods for Measurement for Irregu|ar Var|at|ons







HFTH00S F0R HFASuRFHFtT 0F SFCulAR TRFt0
1he followlng are Lhe prlnclpal meLhods of measurlng Lrend from glven
Llme serles
1 GkAnICAL Ck IkLL nAND CUkVL ML1nCD
1hls ls Lhe slmple meLhod of sLudylng Lrend ln Lhls meLhod Lhe glven
Llme serles daLa are ploLLed on graph paper by Laklng Llme on xaxls
and Lhe oLher varlable on ?axls 1he graph obLalned wlll be lrregular as
lL would lnclude shorLrun osclllaLlons We may observe Lhe up and
down movemenL of Lhe curve and lf a smooLh freehand curve ls drawn
passlng approxlmaLely Lo all polnLs of a curve prevlously drawn lL
would ellmlnaLe Lhe shorLrun osclllaLlons (seasonal cycllcal and
lrregular varlaLlons) and show Lhe longperlod general Lendency of Lhe
daLa 1hls ls exacLly whaL ls meanL by 1rend Powever lL ls very dlfflculL
Lo draw a freehand smooLh curve and dlfferenL persons are llkely Lo
draw dlfferenL curves from Lhe same daLa 1he followlng polnLs musL be
kepL ln mlnd ln drawlng a freehand smooLh curve
11haL Lhe curve ls smooLh
21haL Lhe numbers of polnLs above Lhe llne or curve are equal
Lo Lhe polnLs below lL
31haL Lhe sum of verLlcal devlaLlons of Lhe polnLs above Lhe
smooLhed llne ls equal Lo Lhe sum of Lhe verLlcal devlaLlons
of Lhe polnLs below Lhe llne ln Lhls way Lhe poslLlve
devlaLlons wlll cancel Lhe negaLlve devlaLlons 1hese
devlaLlons are Lhe effecLs of seasonal cycllcal and lrregular
varlaLlons and by Lhls process Lhey are ellmlnaLed
4


41he sum of Lhe squares of Lhe verLlcal devlaLlons from Lhe
Lrend llne curve ls mlnlmum (1hls ls one of Lhe
characLerlsLlcs of Lhe Lrend llne flLLed by Lhe meLhod of lesL
squares )

1he Lrend values can be read for varlous Llme perlods by locaLlng Lhem
on Lhe Lrend llne agalnsL each Llme perlod
1he followlng example wlll lllusLraLe Lhe flLLlng of a freehand curve Lo
seL of Llme serles values

Lxamp|e
1he Lable below shows Lhe daLa of sale of nlne years
?ear 1990 1991 1992 1993 1994 1993 1996 1997 1998
Sales ln
(lakh unlLs)
63 93 113 63 120 100 130 133 172


lf we draw a graph Laklng year on xaxls and sales on yaxls lL wlll be
lrregular as shown below now drawlng a freehand curve passlng
approxlmaLely Lhrough all Lhls polnLs wlll represenL Lrend llne (shown
below by black llne)




MLkI1S
1lL ls slmple meLhod of esLlmaLlng Lrend whlch requlres no
maLhemaLlcal calculaLlons
2lL ls a flexlble meLhod as compared Lo rlgld maLhemaLlcal
Lrends and Lherefore a beLLer represenLaLlve of Lhe Lrend
of Lhe daLa
31hls meLhod can be used even lf Lrend ls noL llnear
4lf Lhe observaLlons are relaLlvely sLable Lhe Lrend can easlly
be approxlmaLed by Lhls meLhod
38elng a non maLhemaLlcal meLhod lL can be applled even by
a common man

DLMLkI1S
1lL ls sub[ecLlve meLhod 1he values of Lrend obLalned by
dlfferenL sLaLlsLlclans would be dlfferenL and hence noL
rellable
2redlcLlons made on Lhe basls of Lhls meLhod are of llLLle
value



ML1nCD CI SLLLC1LD CIN1S
ln Lhls meLhod Lwo polnLs consldered Lo be Lhe mosL
represenLaLlve or normal are [olned by sLralghL llne Lo geL secular
Lrend 1hls agaln ls a sub[ecLlve meLhod slnce dlfferenL persons may
have dlfferenL oplnlons regardlng Lhe represenLaLlve polnLs lurLher
only llnear Lrend can be deLermlned by Lhls meLhod


ML1nCD CI SLMIAVLkAGLS
under Lhls meLhod as Lhe name lLself suggesLs semlaverages are
calculaLed Lo flnd ouL Lhe Lrend values 8y semlaverages ls meanL Lhe
averages of Lhe Lwo halves of a serles ln Lhls meLhod Lhus Lhe glven
serles ls dlvlded lnLo Lwo equal parLs (halves) and Lhe arlLhmeLlc mean
of Lhe values of each parL (half) ls calculaLed 1he compuLed means are
Lermed as semlaverages Lach semlaverage ls palred wlLh Lhe cenLre
of Llme perlod of lLs parL 1he Lwo palrs are Lhen ploLLed on a graph
paper and Lhe polnLs are [olned by a sLralghL llne Lo geL Lhe Lrend lL
should be noLed LhaL lf Lhe daLa ls for even number of years lL can be
easlly dlvlded lnLo Lwo halves 8uL lf lL ls for odd number of years we
leave Lhe mlddle year of Lhe Llme serles and Lwo halves consLlLuLe Lhe
perlods on each slde of Lhe mlddle year
MLkI1S
1lL ls slmple meLhod of measurlng Lrend
2lL ls an ob[ecLlve meLhod because anyone applylng Lhls Lo a glven
daLa would geL ldenLlcal Lrend value



DLMLkI1S
11hls meLhod can glve only llnear Lrend of Lhe daLa lrrespecLlve of
wheLher lL exlsLs or noL
21hls ls only a crude meLhod of measurlng Lrend slnce we do noL
know wheLher Lhe effecLs of oLher componenLs are compleLely
ellmlnaLed or noL

4 ML1nCD CI MCVING AVLkAGL
1hls meLhod ls based on Lhe prlnclple LhaL Lhe LoLal effecL of
perlodlc varlaLlons aL dlfferenL polnLs of Llme ln lLs cycle geLs
compleLely neuLrallzed le S
L
0 ln one year and C
L
0 ln Lhe
perlods of cycllcal varlaLlons
ln Lhe meLhod of movlng average successlve arlLhmeLlc averages
are compuLed from overlapplng groups of successlve values of a Llme
serles Lach group lncludes all Lhe observaLlons ln a glven Llme lnLerval
Lermed as Lhe per|od of mov|ng average 1he nexL group ls obLalned by
replaclng Lhe oldesL value by Lhe nexL value ln Lhe serles 1he averages
of such groups are known as Lhe movlng averages 1he movlng
averages of a group are always shown aL Lhe cenLre of lLs perlod
1he process of compuLlng movlng averages smooLhens ouL Lhe
flucLuaLlons ln Lhe Llme serles daLa lL can be shown LhaL lf Lhe Lrend ls
llnear and Lhe osclllaLory varlaLlons are regular Lhe movlng average
wlLh Lhe perlod equal Lo Lhe perlod of osclllaLory varlaLlons would geL
mlnlmlzed because Lhe average of a number of observaLlons musL lle
beLween Lhe smallesL and Lhe largesL observaLlon lL should be noLed
LhaL Lhe larger ls Lhe perlod of movlng average Lhe more would be Lhe



reducLlon ln Lhe effecL of random componenLs buL Lhe more
lnformaLlon ls losL aL Lhe Lwo ends of daLa le lL reduces Lhe curvaLure
of curvlllnear Lrends
When Lhe Lrend ls non llnear Lhe movlng averages would glve
blased raLher Lhan Lhe acLual Lrend values
Suppose LhaL Lhe successlve observaLlons are Laken aL equal
lnLervals of Llme say yearly are ?
1
?
2
?
3

Mov|ng Average when the per|od |s Cdd
now by a Lhreeyearly movlng averages we shall obLaln average
of flrsL Lhree consecuLlve years (beglnnlng wlLh Lhe second year) and
place lL agalnsL Llme L2 Lhen Lhe average of Lhe nexL Lhree
consecuLlve years (beglnnlng wlLh Lhe second year) and place lL agalnsL
Llme L3 and so on 1hls ls lllusLraLed below
1lme
(L)
CbservaLlons
?
L

Movlng 1oLal Movlng Average
(3 ?ears)
1 ?
1

2 ?
2
?
1
+ ?
2
+ ?
3
Z (?
1
+ ?
2
+ ?
3
)
3 ?
3
?
2
+ ?
3
+ ?
4
Z (?
2
+ ?
3
+ ?
4
)
4 ?
4
?
3
+ ?
4
+ ?
3
Z (?
3
+ ?
4
+ ?
3
)
3 ?
3


lL should be noLed LhaL for odd perlod movlng average lL ls noL
posslble Lo geL Lhe movlng averages for Lhe flrsL and Lhe lasL perlods





Mov|ng Average when the per|od |s Lven

lor an even order movlng average Lwo averaglng processes are
necessary ln order Lo cenLre Lhe movlng average agalnsL perlods raLher
Lhan beLween perlods lor example for a four yearly movlng average
we shall flrsL obLaln Lhe average ?
1
1/4(?
1
+ ?
2
+ ?
3
+ ?
4
) of Lhe flrsL
four years and place lL ln beLween L 2 and L3 Lhen Lhe average ?
2

1/4( ?
2
+ ?
3
+ ?
4
+ ?
3
) of Lhe nexL four years ls and place lL ln beLween
L3 and L4 and flnally obLaln Lhe average Z(?
1
+ ?
2
) of Lhe Lwo
averages and place lL agalnsL Llme L3 1hus Lhe movlng average ls
broughL agalnsL Llme or perlod raLher Lhan beLween perlods 1he same
procedure ls repeaLed for furLher resulLs 1hls ls LabulaLed below
1lme
(L)
CbservaLlons
?
L

Movlng Average for
4perlod
CenLered value
1 ?
1


2 ?
2

(?
1
+ ?
2
+ ?
3
+ ?
4
)

A
1

3 ?
3
{A
1
+ A
2
)
(?
2
+ ?
3
+ ?
4
+ ?
3
)

A

4 ?
4


lL should be noLed LhaL when Lhe perlod of movlng average ls even Lhe
compuLed average wlll correspond Lo Lhe mlddle of Lhe Lwo mlddle
mosL perlods


10


MLkI1S
11hls meLhod ls easy Lo undersLand and easy Lo use because Lhere
are no maLhemaLlcal complexlLles lnvolved
2lL ls an ob[ecLlve meLhod ln Lhe sense LhaL anybody worklng on a
problem wlLh Lhe meLhod wlll geL Lhe same Lrend values lL ls ln
Lhls respecL beLLer Lhan Lhe free hand curve meLhod
3lL ls a flexlble meLhod ln Lhe sense LhaL lf a few more observaLlons
are added Lhe enLlre calculaLlons are noL changed 1hls noL wlLh
Lhe case of semlaverage meLhod
4When Lhe perlod of osclllaLory movemenLs ls equal Lo Lhe perlod
of movlng average Lhese movemenLs are compleLely ellmlnaLed
38y Lhe lndlrecL use of Lhls meLhod lL ls also posslble Lo lsolaLe
seasonal cycllcal and random componenLs

DLMLkI1S
1lL ls noL posslble Lo calculaLe Lrend values for all Lhe lLems of Lhe
serles Some lnformaLlon ls always losL aL lLs ends
21hls meLhod can deLermlne accuraLe values of Lrend only lf Lhe
osclllaLory and Lhe random flucLuaLlons are unlform ln Lerms of
perlod and ampllLude and Lhe Lrend ls aL leasL approxlmaLely
llnear Powever Lhese condlLlons are rarely meL ln pracLlce
When Lhe Lrend ls noL llnear Lhe movlng averages wlll noL glve
correcL values of Lhe Lrend
31he Lrend values obLalned by movlng averages may noL follow any
maLhemaLlcal paLLern le falls ln seLLlng up a funcLlonal
relaLlonshlp beLween Lhe values of x(Llme) and ?(values) and Lhus
11


cannoL be used for forecasLlng whlch perhaps ls Lhe maln Lask of
any Llme serles analysls
41he selecLlon of perlod of movlng average ls a dlfflculL Lask and a
greaL deal of care ls needed Lo deLermlne lL
3Llke arlLhmeLlc mean Lhe movlng averages are Loo much affecLed
by exLreme values

ML1nCD CI LLAS1 SUAkLS

1hls ls one of Lhe mosL popular meLhods of flLLlng a maLhemaLlcal
Lrend 1he flLLed Lrend ls Lermed as Lhe besL ln Lhe sense LhaL Lhe sum
of squares of devlaLlons of observaLlons from lL ls mlnlmlzed 1hls
meLhod of LeasL squares may be used elLher Lo flL llnear Lrend or a non
llnear Lrend (arabollc and LxponenLlal Lrend)

II11IG CI LINLAk 1kLND
Clven Lhe daLa (?
L
L) for n perlods where L denoLes Llme perlod such as
year monLh day eLc We have Lo Lhe values of Lhe Lwo consLanLs 'a'
and 'b' of Lhe llnear Lrend equaLlon
?
L
a + bL
Where Lhe value of 'a' ls merely Lhe ?lnLercepL or Lhe helghL of Lhe llne
above orlgln 1haL ls when x0 ? a 1he oLher consLanL 'b' represenLs
Lhe slope of Lhe Lrend llne When b ls poslLlve Lhe slope ls upwards
and when b ls negaLlve Lhe slope ls downward
1


1hls llne ls Lermed as Lhe llne of besL flL because lL ls so flLLed LhaL Lhe
LoLal dlsLance of devlaLlons of Lhe glven daLa from Lhe llne ls mlnlmum
1he LoLal of devlaLlons ls calculaLed by squarlng Lhe dlfference ln Lrend
value and acLual value of varlable 1hus Lhe Lerm LeasL Squares" ls
aLLached Lo Lhls meLhod
uslng leasL square meLhod Lhe normal equaLlon for obLalnlng Lhe
values of a and b are
?
L
na + b
L
L?
L
aL + bL
2


LeL x L A such LhaL x 0 where A denoLes Lhe year of orlgln
1he above equaLlons can also be wrlLLen as
? na + bx
x? ax + b x
2



Slnce x 0 le devlaLlon from acLual mean ls zero
We can wrlLe



a ]n
b k ]k

1


II11ING CI AkA8CLIC 1kLND
1he maLhemaLlcal form of a parabollc Lrend ls glven by
?
L
a + bL+cL
2

Pere a b and c are consLanLs Lo be deLermlned from Lhe glven daLa
uslng Lhe meLhod of leasL squares Lhe normal equaLlons for Lhe
slmulLaneous soluLlon of a b and c are
? na + bL +cL
2

L? aL + bL
2
+ cL
3
L
2
? aL
2
+ bL
3
+ cL
4


8y selecLlng a sulLable year of orlgln le deflne x L orlgln such LhaL
x 0 Lhe compuLaLlon work can be conslderably slmpllfled Also noLe
LhaL lf x 0 Lhen x
3
wlll also be equal Lo zero 1hus Lhe above
equaLlons can be rewrlLLen as
? na +cx
2
(1)
x? bx
2
(2)
x
2
? ax
2
+ cx
4
(3)

lrom equaLlon (2) we geL


b k]k

14



lrom equaLlon (1) we geL




And from equaLlon (3) we geL







1hls are Lhe Lhree equaLlons Lo flnd Lhe value of consLanLs a b and c

II11ING CI LkCNLN1IAL 1kLND
1he general form of an exponenLlal Lrend ls
? ab
L

a ck

]n
c nk

(k

% ( % ]nk
4
(k

%

or
c k

ak

]k
4

1


Where 'a' and 'b' are consLanLs Lo be deLermlned from Lhe observed
daLa
1aklng logarlLhms of boLh slde we gave log ? log a + log b
1hls ls llnear equaLlon ln log ? and L can be flLLed ln a slmllar way as
done ln case of llnear Lrend LeL Alog a and 8 log b Lhen Lhe above
equaLlon can be wrlLLen as
log ? A + 8L
1he normal equaLlons based on Lhe prlnclple of leasL squares are
log ? n A + 8 L
And L log ? n L + 8 L
2

8y selecLlng a sulLable orlgln le deflnlng x L orlgln such LhaL x 0
Lhe compuLaLlon work can be slmpllfled 1he values of A and 8 are
glven by



And




A |og ] n
8 k |og ] k

1


1hus Lhe flLLed Lrend equaLlon can be wrlLLen as
log ? A + 8x or
? AnLllog A +8x
AnLllog log a + x log b
AnLllog log ab
x

ab
x


MLkI1S
1Clven Lhe maLhemaLlcal form of Lhe Lrend Lo be flLLed Lhe leasL
squares meLhod ls an ob[ecLlve meLhod
2unllke Lhe movlng average meLhod lL ls posslble Lo compuLe
Lrend values for all Lhe perlods and predlcL Lhe value for a perlod
lylng ouLslde Lhe observed daLa
31he resulLs of Lhe meLhod of leasL squares are mosL saLlsfacLory
because Lhe flLLed Lrend saLlsfles Lhe Lwo mosL lmporLanL
properLles le (1) (?
0
?
L
) 0 and (2) (?
0
?
L
)
2
ls mlnlmum
Pere ?
0
denoLes Lhe observed values and ?
L
denoLes Lhe calculaLed
Lrend value
1he flrsL properLy lmplles LhaL Lhe poslLlon of flLLed Lrend
equaLlon ls such LhaL Lhe sum of devlaLlons of observaLlons above and
below Lhls equal Lo zero 1he second properLy lmplles LhaL Lhe sums of
squares of devlaLlons of observaLlons abouL Lhe Lrend equaLlons are
mlnlmum

1


DLMLkI1S
1As compared wlLh Lhe movlng average meLhod lL ls cumbersome
meLhod
2lL ls noL flexlble llke Lhe movlng average meLhod lf some
observaLlons are added Lhen Lhe enLlre calculaLlons are Lo be
done once agaln
3lL can predlcL or esLlmaLe values only ln Lhe lmmedlaLe fuLure or
Lhe pasL
41he compuLaLlon of Lrend values on Lhe basls of Lhls meLhod
doesn'L Lake lnLo accounL Lhe oLher componenLs of a Llme serles
and hence noL rellable
3Slnce Lhe cholce of a parLlcular Lrend ls arblLrary Lhe meLhod ls
noL sLrlcLly ob[ecLlve
61hls meLhod cannoL be used Lo flL growLh curves Lhe paLLern
followed by Lhe mosL of Lhe economlc and buslness Llme serles









1


HFASuRFHFtT 0F SFAS0tAl vARlATl0tS
1he measuremenL of seasonal varlaLlons ls done by lsolaLlng Lhem
from oLher componenLs of a Llme serles 1here are four meLhods
commonly used for Lhe measuremenL of seasonal varlaLlons 1hese
meLhods are
1MeLhod of Slmple Average
28aLlo Lo 1rend MeLhod
38aLlo Lo Movlng Average MeLhod
4MeLhod of llnk 8elaLlves

1 ML1nCD CI SIMLL AVLkAGL
1hls ls Lhe easlesL and Lhe slmplesL meLhod of sLudylng seasonal
varlaLlons 1hls meLhod ls used when Lhe Llme serles varlable conslsLs
of only Lhe seasonal and random componenLs 1he effecL of Laklng
average of daLa correspondlng Lo Lhe same perlod (say flrsL quarLer of
each year) ls Lo ellmlnaLe Lhe effecL of random componenL and Lhus
Lhe resulLlng averages conslsL of only seasonal componenL 1hese
averages are Lhen converLed lnLo seasonal lndlces lL lnvolves Lhe
followlng sLeps
lf flgures are glven on a monLhly basls
1Average Lhe raw daLa monLhly year wlse
2llnd Lhe sum of all Lhe flgures relaLlng Lo a monLh lL means add
all values of !anuary for all Lhe years 8epeaL Lhe process for all
Lhe monLhs
1


3llnd Lhe average of monLhly flgures le dlvlde Lhe monLhly LoLal
by Lhe number of years lor example lf Lhe daLa for 3 years (on
monLhly basls ls avallable) Lhere wlll be flve flgures for !anuary
1hese have Lo be LoLaled and dlvlded by flve Lo geL Lhe average
flgures for !anuary CeL such flgures for all monLhs 1hey may be
x
1
x
2
x
3
x
12

4CbLaln Lhe average of monLhly averages by dlvldlng Lhe sum of
averages by 12 or
X + X +X+. . . +X

= X
31aklng Lhe average of monLhly average as 100 flnd ouL Lhe
percenLages of monLhly averages lor Lhe average of !anuary (x
1
)
Lhls percenLage would be
oro o onor
oro o on oros

Cr
X
X

lf lnsLead of Lhe averages Lhe monLhly LoLals are Laken lnLo Lhe
accounL Lhe resulL would be Lhe same
MLkI1S AND DLMLkI1S
1hls ls a slmplesL meLhod of measurlng seasonal varlaLlons
Powever Lhls meLhod ls based on Lhe unreallsLlc assumpLlon LhaL Lhe
Lrend and cycllcal varlaLlons are absenL from Lhe daLa

0


kA1IC 1C 1kLND ML1nCD
1hls meLhod ls used when Lhen cycllcal varlaLlons are absenL from
Lhe daLa le Lhe Llme serles varlable ? conslsLs of Lrend seasonal and
random componenLs
uslng symbols we can wrlLe 1 S k
varlous sLeps ln Lhe compuLaLlon of seasonal lndlces are
1CbLaln Lhe Lrend values for each monLh or quarLer eLc by Lhe
meLhod of leasL squares
2ulvlde Lhe orlglnal values by Lhe correspondlng Lrend values 1hls
would ellmlnaLe Lrend values from Lhe daLa
31o geL flgures ln percenLages Lhe quoLlenLs are mulLlplled by 100
1hus we have Lhree equaLlons





MLkI1S AND DLMLkI1S
lL ls an ob[ecLlve meLhod of measurlng seasonal varlaLlons
Powever lL ls very compllcaLed and doesn'L work lf cycllcal varlaLlons
are presenL

] 1 100
1 S k ] 1 100
S k 100

1


kA1IC 1C MCVING AVLkAGL ML1nCD
1he raLlo Lo movlng average ls Lhe mosL commonly used meLhod
of measurlng seasonal varlaLlons 1hls meLhod assumes Lhe presence of
all Lhe four componenLs of a Llme serles varlous sLeps ln Lhe
compuLaLlon of seasonal lndlces are as follows
1CompuLe Lhe movlng averages wlLh perlod equal Lo Lhe
perlod of seasonal varlaLlons 1hls would ellmlnaLe Lhe
seasonal componenLs and mlnlmlze Lhe effecL of random
componenL 1he resulLlng movlng averages would conslsL of
Lrend cycllcal and random componenLs
21he orlglnal values for each quarLer ( or monLh) are dlvlded
by Lhe respecLlve movlng average flgures and Lhe raLlo ls
expressed as a percenLage le S8" ? / M A 1CS8 / 1C8'
where 8' and 8" denoLe Lhe changed random componenLs
3llnally Lhe random componenL 8" ls ellmlnaLed by Lhe
meLhod of slmple averages

MLkI1S AND DLMLkI1S
1hls meLhod assumes LhaL all Lhe four componenLs of a Llme
serles are presenL and Lherefore wldely used for measurlng seasonal
varlaLlons Powever Lhe seasonal varlaLlons are noL compleLely
ellmlnaLed lf Lhe cycles of Lhese varlaLlons are noL of regular naLure
lurLher some lnformaLlon ls always losL aL ends of Lhe Llme serles





4 LINk kLLA1IVLS ML1nCD
1hls meLhod ls based on Lhe assumpLlon LhaL Lhe Lrend ls llnear
and cycllcal varlaLlons are of unlform paLLern 1he llnk relaLlves are
percenLages of Lhe currenL perlod (quarLer or monLh) as compared wlLh
Lhe prevlous perlod WlLh Lhe compuLaLlons of Lhe llnk relaLlves and
Lhelr average Lhe effecL of cycllcal and Lhe random componenLs ls
mlnlmlzed lurLher Lhe Lrend geLs ellmlnaLed ln Lhe process of
ad[usLmenL of chaln relaLlves 1he followlng sLeps are lnvolved ln Lhe
compuLaLlon of seasonal lndlces by Lhls meLhod
1CompuLe Lhe Llnk 8elaLlve (L8) of each perlod by dlvldlng Lhe
flgure of LhaL perlod wlLh Lhe flgure of prevlous perlod lor
example
Llnk relaLlve of 3
rd
quarLerflgure of 3
rd
quarLer / flgure of 2
nd

quarLer 100
2CbLaln Lhe average of llnk relaLlves of a glven quarLer (or monLh)
of varlous years AM or M
d
can be used for Lhls purpose
1heoreLlcally Lhe laLer ls preferable because Lhe former glves
undue lmporLance Lo exLreme lLems
31hese averages are converLed lnLo chalned relaLlves by assumlng
Lhe chalned relaLlve of Lhe flrsL quarLer (or monLh) equal Lo 100
1he chalned relaLlve (C8) for Lhe currenL perlod (quarLer or
monLh)
C8 of Lhe prevlous perlod L8 of Lhe currenL perlod / 100

4CompuLe Lhe C8 of Lhe flrsL quarLer (or monLh) on Lhe basls of
Lhe lasL quarLer (or monLh) 1hls ls glven by



C8 of Lhe lasL quarLer (monLh) average L8 of Lhe flrsL quarLer
(monLh) / 100
a1hls value ln general ls dlfferenL from 100 due Lo long Lerm
Lrend ln Lhe daLa 1he chalned relaLlves obLalned above are
Lo be ad[usLed for Lhe effecL of Lhls Lrend 1he ad[usLmenL
facLor

u =

|new C. R foi st quatei - ]foi quateily uata

u =

|new C. R foi st month -]foi monthly uata

bCn Lhe assumpLlon LhaL Lhe Lrend ls llnear d 2d 3d eLc ls
respecLlvely subLracLed from Lhe 2
nd
3
rd
4
Lh
eLc quarLer (or
monLh)
3Lxpress Lhe ad[usLed chalned relaLlves as a percenLage of Lhelr
average Lo obLaln seasonal lndlces
6Make sure LhaL Lhe sum of Lhese lndlces ls 400 for quarLerly daLa
and 1200 for monLhly daLa
MLkI1S AND DLMLkI1S
1hls meLhod ls less compllcaLed Lhan Lhe raLlo Lo movlng average
and Lhe raLlo Lo Lrend meLhods Powever Lhls meLhod ls based upon
Lhe assumpLlon of a llnear Lrend whlch may noL always hold Lrue


4


HFASuRFHFtT 0F CYCllCAl vARlATl0tS
A saLlsfacLory meLhod for Lhe dlrecL measuremenL of cycllcal
varlaLlons ls noL avallable 1he maln reason for Lhls ls LhaL alLhough
Lhese varlaLlons may be recurrenL Lhese are seldom found Lo be of
slmllar paLLern havlng same perlod and ampllLude of osclllaLlons
Moreover ln mosL of Lhe cases Lhese varlaLlons are so lnLermlxed wlLh
random varlaLlons LhaL lL ls very dlfflculL lf noL lmposslble Lo separaLe
Lhem
1he cycllcal varlaLlons are ofLen obLalned lndlrecLly as a resldue
afLer Lhe ellmlnaLlon of oLher componenLs varlous sLeps of Lhe meLhod
are glven as below
1CompuLe Lhe Lrend values (1) and Lhe seasonal lndlces(S) by
approprlaLe meLhods Pere S ls obLalned as a fracLlon raLher Lhan
Lhe percenLage
2ulvlde ?values by Lhe producL of Lrend and seasonal lndex 1hls
raLlo would conslsL of cycllcal and random componenL le
C 8 ? / 1 S
3lf Lhere are no random varlaLlons ln Lhe Llme serles Lhe cycllcal
varlaLlons are glven by Lhe sLep (2) above CLherwlse Lhe random
varlaLlons should be smooLhened ouL by compuLlng movlng
averages of C 8 values wlLh approprlaLe perlod WelghLed
movlng average wlLh sulLable welghLs may also be used lf
necessary for Lhls purpose





HFASuRFHFtT 0F RAt00H vARlATl0tS
1he random varlaLlons are also known as lrregular varlaLlons
8ecause of Lhelr naLure lL ls very dlfflculL Lo devlse a formula for Lhelr
dlrecL compuLaLlon Llke Lhe cycllcal varlaLlons Lhls componenL can also
be obLalned as a resldue afLer ellmlnaLlng Lhe effecLs of oLher
componenLs



















8I8LICGkAn
8CCkS AU1nCkS
8uslness sLaLlsLlcs 8 S 8hardwa[
lundamenLals of SLaLlsLlcs u n Llhance
LlemenLs of buslness sLaLlsLlcs v k url
MaLhemaLlcs and SLaLlsLlcs A[ay Coel Asha Coel