BSA CORE 2

MANAGEMENT SCIENCE

MODULE 12
Saturday

LINEAR TREND LINE

 Linear trend lines is also known as best-fit lines.

o These are straight lines used to represent the patterns in simple linear
data sets.
 Data is linear if most data points fall on or very close to the line of
best fit.

o Linear trend line is used to determine if something is trending steadily in a

positive or negative direction.
 For example, the chart below plots the percentage of passengers
on board (Y-axis) against the distance traveled (X-axis).
 The linear trend line here illustrates that the number of passengers
on board the train reduces with distance.

 Logarithmic trend line

o The logarithmic trend line is basically a linear trend line with a curve. It is
also known as the best-fit curved line.

Source: Anderson and Sweeney. An Introduction to Management Science: Quantitative Approach Full
Description. https://www.yumpu.com/en/document/read/63935146/epub-download-an-introduction-
to-management-science-quantitative-approach-full-description
  Typically, the curve represents quick increases or decreases in the
data’s rate of change.
 In other words, logarithmic trend lines are great for analyzing
plots where data values increase or decrease rapidly before
flattening out.

o The following example uses a logarithmic trend line where the rate of
change increases before flattening out.

 Polynomial Trend Lines

o These types of trend lines are best suited for representing or analyzing
fluctuating data sets:
 For example, gains and losses over a particular trading window.
 These trend lines are often represented by parabolic curves
or curved lines, depending on your data sets.

o Polynomial trend lines are categorized based on their orders, which you
can deduce from the number of hills and valleys (fluctuations) in the plot.
 For example, Order 2, Order 3, and Order 4 polynomial trend lines
generally have only one hill or valley, two hills or valleys, and three
hills or valleys, respectively.

Source: Anderson and Sweeney. An Introduction to Management Science: Quantitative Approach Full
Description. https://www.yumpu.com/en/document/read/63935146/epub-download-an-introduction-
to-management-science-quantitative-approach-full-description
 o The example below uses an Order 2 polynomial trend line to illustrate the
profit fluctuations for each year.

 Power Trend Line

o These types of trend lines are curved lines used to plot data sets that
increase at a constant rate.
 For example, a chemical reaction plot that represents changes in
state or composition every n seconds.

o The example below shows a power trend line on a chart that illustrates a
chemical reaction that changes every 10 seconds.

Source: Anderson and Sweeney. An Introduction to Management Science: Quantitative Approach Full
Description. https://www.yumpu.com/en/document/read/63935146/epub-download-an-introduction-
to-management-science-quantitative-approach-full-description
  Exponential Trend Line
o The exponential trend line is similar to the power trend line. It is a curved
line that illustrates the rise and fall of data points at an increasing rate.
 The following example shows the use of an exponential trend line
on a tiger population that falls with time.

 Moving Average Trend Lines

o A moving average trend line smooths out the nearest possible pattern
amidst numerous fluctuating data values.
 Each point in a moving average trend line is the average value of
specific data points, set by the period option.

Source: Anderson and Sweeney. An Introduction to Management Science: Quantitative Approach Full
Description. https://www.yumpu.com/en/document/read/63935146/epub-download-an-introduction-
to-management-science-quantitative-approach-full-description
  For example, a “period 3” means the average of the first 3
data values would be the first point.

o The example below uses the moving average trend line to illustrate a clear
pattern in fluctuating stock prices.

Source: Anderson and Sweeney. An Introduction to Management Science: Quantitative Approach Full
Description. https://www.yumpu.com/en/document/read/63935146/epub-download-an-introduction-
to-management-science-quantitative-approach-full-description