Edexcel GCSE (9 – 1)

Statistics
Mr M Dominguez
mdominguez@kegs.org.uk
 Chapter 5 Time Series
Lesson 1: 5.1, 5.2 & 5.3
Lesson 2:
§ 5.1 Line graphs and time series
Mr Jones says that his Gas bill is getting more expensive. Mrs Jones
says that he talks rubbish and it is actually getting cheaper. Below
are Mr Jones’ gas bills for a 2 year period. Who do you think is
right? Why?

2010 2011

Quarter 1 2 3 4 1 2 3 4

Bill (£’s) 122.24 87.08 73.04 118.46 136.80 96.34 80.06 135.96

To make the data easier to interpret we can plot it on a time series

graphs.
A time series graph is plotted with time on the x-axis.
Questions in this chapter will often refer to quarters of a year.
§ 5.1 Line graphs and time series
Mr Jones says that his Gas bill is getting more expensive. Mrs Jones
says that he talks rubbish and it is actually getting cheaper. Below
are Mr Jones’ gas bills for a 2 year period. Who do you think is
right? Why?
Jan 10 – Apr 10 – Jul 10 – Oct 10 – Jan 11 – Apr 11 – Jul 11 – Oct 11 –
Quarter
Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11
Bill
122.24 87.08 73.04 118.46 136.80 96.34 80.06 135.96
(£’s)

To make the data easier to interpret we can plot it on a time series

graphs.
A time series graph is plotted with time on the x-axis.
Questions in this chapter will often refer to quarters of a year.
 Time Series Graph for Gas Bills
160

140

120

100
Cost (£s)

80

60

40

20

0
Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11
1 2 3 4 1 2 3 4
2010 2011

2010 2011
Quarter 1 2 3 4 1 2 3 4

Bill (£’s) 122.24 87.08 73.04 118.46 136.80 96.34 80.06 135.96
 Time Series Graph for Gas Bills
160

140

120

100
Cost (£s)

80

60

40

20

0
Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11
1 2 3 4 1 2 3 4
2010 2011
What comments can we draw from the graph?
His gas bill is lowest in August of each year.
His gas bill is largest in the winter months.
The gas bill seems to generally increase over the years.
 Time Series Graph for Gas Bills
160

140

120

100
Cost (£s)

80

60

40

20
We join the point up with a dashed line as
not know what the bill would be between
0
end of one quarter and the end of the nex
Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11
In general we use a dashed line when the
values in between the points have no mea
What comments can we draw from the graph?
His gas bill is lowest in August of each year.
His gas bill is largest in the winter months.
The gas bill seems to generally increase over the years.
§ 5.2 Trend lines
When interpreting time series we may wish to describe season variations and also
the general trend. To make interpreting the general trend easier, a trend line can
be drawn (similar to a line of best fit.) A tend line may show a tendency to rise, fall
or to stay level.
160
Time Series Graph for Gas Bills
140

120

100
Cost (£s)

80

On average over the

60
last two years the
40
gas bill has risen

20

0
Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11
§ 5.3 Variations in time series
There are two types of variations we need to be able to describe:
• General trends over the years
As shown by the trend line (rising/falling/level trend)

• Seasonal variations (over common time periods months/days)

Are identified by repeating patterns. For example times at
which values are above/below the trend line.

When asked to describe the variations of a trend line you will be

required to construct a paragraph which follows the structure
below.

A statement with regards to a general trend followed by a

description using the context of the question.
A statement with regards to seasonal variation, followed by a
description in context and a outline of the time periods.
 160
Time Series Graph for Gas Bills
140

120

100
Cost (£s)

80

60

40

20

0
Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11

The graph shows a rising trend. The price of gas tends to increase each year.
There is seasonal variation with the gas bill being higher than the trend line in
the first and last quarter (Oct-Mar) and lower than the trend value in the
second and third quarter of each year.
The temperature is colder in the winter hence more gas is needed for the
heating./ In the summer it is warmer so less gas is needed to heat the house.
§ 5.4 Moving averages
Moving averages are calculated as
4 point (using quarters)
3 point (four times a year) or,
2 point (every 6 months)
The moving average is always calculating using three consecutive
time periods and plotted in the midpoint of the group.
(eg 4 point moving average plotted half way between quarter 2 and
quarter 3)
 As there are 4 separate periods in each year we would
calculate a four-point moving average. For example:

2010 2011
Quarter 1 2 3 4 1 2 3 4

Bill (£’s) 122.24 87.08 73.04 118.46 136.80 96.34 80.06 135.96

1st four-point Moving average: (122.24 + 87.08 + 73.04 + 118.46) ÷ 4 = 100.21

2nd four-point Moving average: (87.08 + 73.04 + 118.46 + 136.80) ÷ 4 = 103.85

3rd four-point Moving average: (73.04 + 118.46 + 136.80 + 96.34) ÷ 4 = 106.16
4th four-point Moving average: (118.46 + 136.80 + 96.34 + 80.06 ) ÷ 4 = 107.92
5th four-point Moving average: (136.80 + 96.34 + 80.06 + 135.96) ÷ 4 = 112.29
 Mrs Smith is the Manager of ‘Smith’s Toy Shop’. She is keen to see
whether her sales are improving. Every 6 months she does a review of
the shop’s sales. The results are shown in the table below:
2007 2008 2009 2010
Period 1 2 1 2 1 2 1 2
Sales
120.3 57.2 134.8 60.7 146.9 68.5 157.1 74.2
(£1,000’s)

Mrs Smith has got an appointment with her accountant tomorrow.

Should she be worried?

a) Plot the points on a time series graph

b) On the same set of axis plot the two point moving average.
(Why is a two point moving average used here?
c) Using the moving averages as a guide draw a trend line. (Do
not join up the averages
d) Write a few sentences as a conclusion to the question.
The Graph for Mrs Smith’s sales would look like this:
Time Series Graph for Toy Sales
180

160

140

120
Sales (£100's)

100

80

60

40

20

0
01-Jan-07 01-Jul-07 01-Jan-08 01-Jul-08 01-Jan-09 01-Jul-09 01-Jan-10 01-Jul-10
 As there are 2 separate periods in each year we would
calculate a two-point moving average. For example:

2007 2008 2009 2010

Period 1 2 1 2 1 2 1 2
Sales
120.3 57.2 134.8 60.7 146.9 68.5 157.1 74.2
(£1,000’s)

1st two-point Moving average: (120.3 + 57.2) ÷ 2 = 88.75

2nd two-point Moving average: (57.2 + 134.8) ÷ 2 = 96
3rd two-point Moving average: (134.8 + 60.7) ÷ 2 = 97.75
4th two-point Moving average: (60.7 + 146.9) ÷ 2 = 103.8
5th two-point Moving average: (146.9 + 68.5) ÷ 2 = 107.7
6th two-point Moving average: (68.5 + 157.1) ÷ 2 = 112.8
7th two-point Moving average: (157.1 + 74.2) ÷ 2 = 115.65
The values of the two-point moving averages would be plotted on the Time Series Graph
and would look like this: (note the values are plotted at the mid-point).

Time Series Graph for Toy Sales

180

160

140

120
Sales (£100's)

100

80

60

40

20

0
01-Jan-07 01-Jul-07 01-Jan-08 01-Jul-08 01-Jan-09 01-Jul-09 01-Jan-10 01-Jul-10
Hints and Tips
When you are drawing Time Series Graphs
remember the following things:

1. Time always goes along the x-axis.

2. If the times are given as a period (eg 3 months, plot
the point in the middle).
3. Points should NOT be joined
4. You should try to explain reasons for fluctuations in
the graph. Including seasonal variations.
5. You should comment on the general trends which
the graph shows. Is there an upward or downward
trend? Including seasonal trends.
Reverse Question
Month Bill (£) Moving Av (£) (with
prev’ 3 mths)
Here is a table of
January 45 37
data.. February 34 ? (possible?!)
March 23 34.5
What are the missing April ? 31
values? May 35 ?
June ? ?
A 4 point moving July 54 40.25
average has been August 65 ?
used. September Data lost ?possible?
October Data lost 44.75
November ? 36.75
December ? 28
Reverse Question
Month Bill (£) 4 Point Moving Av (£)
(with prev’ 3 mths)
Here is a table of
January 45 37
data..
February 34 ? (possible?!)
March 23 34.5
What are the missing
April 22 31
values?
May 35 31
June 50 32.5
A 4 point moving
July 54 40.25
average has been
August 65 51
used.
September Data lost ?
October Data lost 44.75
November 22 36.75
December 30 28
§ 5.5 Estimating seasonal variations and making
predictions

In the final section of chapter 5 we introduce additional calculations that can

enable us to compare data over time.
• Seasonal variation at a point
• Predicted value
• Estimated mean seasonal variation (average seasonal effect.)

The quarterly sales of a company over a three year period are show in
the table
Year 2012 2013 2014
Quarter 1 2 3 4 1 2 3 4 1 2 3 4
Sales 120 127 127 139 125 132 130 144 132 140 138

a) Draw the time series graph, plot the moving averages and draw a trend line.
 The quarterly sales of a company over a three year period are show in
the table
Year 2012 2013 2014
Quarter 1 2 3 4 1 2 3 4 1 2 3 4
Sales 120 127 127 139 125 132 130 144 132 140 138

a) Draw the time series graph, plot the moving averages and draw a trend line.

150

145
1st:
140
2nd:
135
Sales

130 3rd:
125
4th:
120

115
5th: 6th:
0
1

7th: 8th:
2012 2013 2014
 The quarterly sales of a company over a three year period are show in
the table
Year 2012 2013 2014
Quarter 1 2 3 4 1 2 3 4 1 2 3 4
Sales 120 127 127 139 125 132 130 144 132 140 138

a) Draw the time series graph, plot the moving averages and draw a trend line.

150
b) Calculate the mean
145
seasonal variation
140

135
Seasonal Variation at a point =
actual value – trend value
Sales

130

125

120

115
0
1

2012 2013 2014

 The quarterly sales of a company over a three year period are show in
the table
Year 2012 2013 2014
Quarter 1 2 3 4 1 2 3 4 1 2 3 4
Sales 120 127 127 139 125 132 130 144 132 140 138
Trend 125.5 126.3 127.9 130.5 132.2 133.6 135.0 137.2 138.2 139.6 141.1
Seasonal
variation -5.5 0.7 -0.9 8.5 -7.2 -1.6 -5 6.8 -6.2 0.4 -3.1

150

145 b) Calculate the mean seasonal

140
variation
135 Seasonal Variation at a point =
Sales

130 actual value – trend value

125

120 Estimated mean seasonal

115 variation for any season =
0
mean of all the seasonal
variations for that season.
1

2012 2013 2014

The quarterly sales of a company over a three year period are show in
the table
Year 2012 2013 2014
Quarter 1 2 3 4 1 2 3 4 1 2 3 4
Sales 120 127 127 139 125 132 130 144 132 140 138
Trend 125.5 126.3 127.9 130.5 134.2 138.1 135.0 137.2 138.2 139.6 141.1
Seasonal
-5.5 0.7 -0.9 8.5 -9.2 -1.6 -5 6.8 -6.2 0.4 -3.1
variation

Quarter
b) Calculate the mean seasonal
variation
Year 1 2 3 4
1 Estimated mean seasonal
2 variation for any season =
3
mean of all the seasonal
variations for that season.
Total
Mean
The quarterly sales of a company over a three year period are show in
the table
Year 2012 2013 2014
Quarter 1 2 3 4 1 2 3 4 1 2 3 4
Sales 120 127 127 139 125 132 130 144 132 140 138
Trend 125.5 126.3 127.9 130.5 134.2 138.1 135.0 137.2 138.2 139.6 141.1
Seasonal
-5.5 0.7 -0.9 8.5 -9.2 -1.6 -5 6.8 -6.2 0.4 -3.1
variation

Quarter
b) Calculate the mean seasonal
variation
Year 1 2 3 4
1 -5.5 0.7 -0.9 8.5 Estimated mean seasonal
2 -7.2 -1.6 -5 6.8 variation for any season =
3 -6.2 0.4 -3.1 NA
mean of all the seasonal
variations for that season.
Total -20.9 -0.5 -9 15.3
Mean -6.97 -0.17 -3 7.65
The quarterly sales of a company over a three year period are show in
the table
Year 2012 2013 2014
Quarter 1 2 3 4 1 2 3 4 1 2 3 4
Sales 120 127 127 139 125 132 130 144 132 140 138
Trend 125.5 126.3 127.9 130.5 134.2 138.1 135.0 137.2 138.2 139.6 141.1
Seasonal
-5.5 0.7 -0.9 8.5 -9.2 -1.6 -5 6.8 -6.2 0.4 -3.1
variation

Quarter
c) Using your trend line and the
seasonal variation. Predict the
Year 1 2 3 4
of sales in the last quarter of
1 -5.5 0.7 -0.9 8.5
2014.
2 -7.2 -1.6 -5 6.8
3 -6.2 0.4 -3.1 NA Predicted value = trend line
Total -20.9 -0.5 -9 15.3 value + estimated mean
seasonal variation
Mean -6.97 -0.17 -3 7.65
The quarterly sales of a company over a three year period are show in
the table
Year 2012 2013 2014
Quarter 1 2 3 4 1 2 3 4 1 2 3 4
Sales 120 127 127 139 125 132 130 144 132 140 138
Trend 125.5 126.3 127.9 130.5 134.2 138.1 135.0 137.2 138.2 139.6 141.1 142.3

Seasonal
-5.5 0.7 -0.9 8.5 -9.2 -1.6 -5 6.8 -6.2 0.4 -3.1
variation

Quarter
c) Using your trend line and the
seasonal variation. Predict the
Year 1 2 3 4
of sales in the last quarter of
1 -5.5 0.7 -0.9 8.5
2014.
2 -9.2 -1.6 -5 6.8
3 -6.2 0.4 -3.1 NA Predicted value = trend line
Total -20.9 -0.5 -9 15.3 value + estimated mean
seasonal variation
Mean -6.97 -0.17 -3 7.65

Predicted value for quarter 4 = 142.3 + 7.65 = 149.94