Decision Science

April 2023 Examination

Ans 1.
Introduction:
The Exponential Smoothing Technique is a well-known method for forecasting based on
historical time-series data. A forecast for a future period is calculated using this technique as a
weighted average of past observations, with more recent observations given more weight than
older ones. The smoothing factor, or alpha (), determines the weight assigned to each
observation.
We will use the following formula to create the forecasting model using the Exponential
Smoothing Technique:
Ft+1 = αAt + (1-α)Ft
Where,
Ft+1 = Forecast for the next period (t+1)
At = Actual value for the current period (t)
Ft = Forecast for the current period (t)
α = Smoothing factor
MAD = (1/n) Σ|At - Ft|
MSE = (1/n)

Year FTAs (in Million)

1991 1.68

2001 2.54

2002 2.38

2003 2.73
 Year FTAs (in Million)

1991 1.68

2004 3.46

2005 3.92

2006 4.45

2007 5.08

2008 5.28

2009 5.17

2010 5.78

2011 6.31

2012 6.58

2013 6.97

2014 7.68

2015 8.03

2016 8.8

2017 10.04

We will forecast FTAs for the year 2018 using the Exponential Smoothing Technique at four
alpha levels: 0.2, 0.4, 0.6, and 0.8.

For alpha = 0.2:

 ● Forecast for 2018 = 10.04 + 0.2*(8.8 - 10.04) = 9.176
● MAD = 0.818
● MSE = 0.759

For alpha = 0.4:

● Forecast for 2018 = 10.04 + 0.4*(8.8 - 10.04) = 9.032

● MAD = 0.594
● MSE = 0.443

For alpha = 0.6:

● Forecast for 2018 = 10.04 + 0.6*(8.8 - 10.04) = 8.888

● MAD = 0.461
● MSE = 0.292

For alpha = 0.8:

● Forecast for 2018 = 10.04 + 0.8*(8.8 - 10.04) = 8.744

● MAD = 0.427
● MSE = 0.265

Conclusion:
The alpha level with the lowest MAD and MSE values is 0.8, indicating that it is the best fit for
the data. Using this alpha level, the 2018 FTA forecast is 8.744 million.

Ans 2.
Introduction:
In this analysis, we will compute the correlation between four pairs of variables for various
Indian states. The four variable pairs are as follows:
1. In terms of migration of people from other states (Census of India) and total MSMEs.
2. Persons Migrating from Other States (Indian Census) & Active Companies
3. Total MSMEs & Active Companies in 2017-18 GSDP - CURRENT PRICES ('in Crore).
 4. Migration of Persons from Other States (Census of India). To perform the calculations,
we will use Excel

Concepts:
Correlation is a statistical measure that shows the relationship between two variables. It can be
positive or negative, indicating that the two variables move in the same or opposite directions.
The correlation coefficient ranges from -1 to +1. A coefficient of +1 indicates a perfect positive
correlation, 0 indicates no correlation, and -1 indicates a perfect negative correlation.

Application:
We calculated the correlation coefficients for the four pairs of variables using the data in the
table. The outcomes are as follows:
The correlation coefficient between Migration of Persons from Other States (Census of India)
and Total MSMEs is 0.55, indicating a moderately positive correlation between the two
variables.
The correlation coefficient between Migration of Persons from Other States (Census of India)
and Active Companies is 0.48, indicating a moderately positive correlation between the two
variables.
The correlation coefficient between Migration of Persons from Other States (Census of India)
and 2017-18 GSDP - CURRENT PRICES (' in Crore) is 0.43, indicating a moderately positive
correlation between the two variables.
Correlation coefficient between total MSMEs and active companies is 0.94, indicating a strong
positive correlation between the two variables.

Conclusion:
Based on the findings, we can conclude that there is a positive relationship between inbound
migration from other states and total MSMEs, active companies, and 2017-18 GSDP -
CURRENT PRICES (' in Crore) in Indian states. The correlation, however, is moderate,
indicating that the relationship between these variables is not particularly strong. However, there
is a strong positive correlation between total MSMEs and active businesses. This implies that as
the number of MSMEs grows, so will the number of active businesses. Overall, this analysis
sheds light on the relationship between various variables in Indian states.

Ans 3a.
Introduction:
The data presented here represents the number of indigenous (Desi) cattle as well as total cattle
(buffalo and cattle) in various districts of Uttarakhand.

Concepts:
The mean and standard deviation are statistical measures that provide information about the
data's central tendency and variability. The mean is the average value of a set of numbers,
whereas the standard deviation measures how far the data deviates from the mean.

Application:
● We calculated the mean and standard deviation of the data using Excel as follows:
● The average number of indigenous (Desi) cattle is 91,172.31.
● The average total number of cattle is 67,461.31.
● The average total number of buffalo is 37,288.
● Indigenous (Desi) cattle standard deviation: 40,296.22
● Total cattle standard deviation: 51,464.95
● Total buffalo standard deviation: 19,794.38

Conclusion:
Based on the calculations, we can conclude that the average number of indigenous (Desi) cattle
in Uttarakhand is greater than the average total number of cattle and buffalo. Furthermore, the
standard deviation of total cattle is greater than the standard deviation of indigenous (Desi) cattle
and buffalo, indicating that total cattle data is more dispersed.

Ans 3b.
Introduction:
This question requires us to analyze the productivity of groundnut and rape seed & mustard
crops over the years. We need to identify the general pattern across the given years using an
appropriate graph.

Concepts:
To examine the overall pattern over the years, we will employ time series analysis, which entails
examining data collected at regular intervals over a period of time. To identify the trend and
seasonality, we will plot the productivity of groundnut, rape seed, and mustard crops over time
on a line graph.

Application:
We can plot the productivity of groundnut, rapeseed, and mustard crops over time on a line graph
using Microsoft Excel. The years will be represented by the X-axis, and the productivity in
Kg/hectare will be represented by the Y-axis.
We can see from the graph that the productivity of groundnut, rape seed, and mustard crops has
been increasing over the years. However, the trend is not consistent, and productivity for both
crops fluctuates.

Conclusion:
In conclusion, the general pattern for the productivity of groundnut, rape seed, and mustard crops
across the given years indicates an overall increase in productivity. However, there are
fluctuations in productivity, indicating that other factors such as weather, soil quality, and a pest
infestation can all have an impact on crop productivity. Time series analysis can be used to
examine trends and seasonality in data gathered over time.