Describe the unique characteristics of each of the five time

Describe the unique characteristics of each of the five time series patterns. Specifically, discuss the underlying pattern, and an example of how each of these is used in business making decisions. Next, explain the process of selecting a forecast method. Be sure to note the importance of identifying the underlying pattern

Solution

A time series is a collection of observations of well-defined data items obtained through repeated measurements over time. It is used in forecasting, statistics, earthquake prediction, stock market analysis etc.

The main time series pattern are:

The main characteristics of time series patterns are as follows:

Example of these in business baking decisions:

Forecasting sales, trend in employee performance which is generally done by HR management, customer churn management, credit attrition rate etc

Selecting forecasting method:

1) Smoothing methods

a) Moving Average

b)Weighted moving average

c)Exponential smoothing

2)Trend Projection

3)Trend Projection Adjusted for Seasonal Influence

4)Causal Forecast( Two Variable, Three Variable and Multi Variable Regression Models)

Process of selecting a forecast method:

a)Clearly define the goal or objective of the organization

b)Extract the required data

c)Explore the series pattern

d) Data processing and cleaning

e)Apply the suitable forecasting method and series

f) Evaluate the results

Importance of identifying the underlying pattern :

It is utmost necessary to identify the underlying pattern so as to select the right forecasting technique. Therefore, Time series plot is the first thing which needs to be developed for achieving the business goals and objectives. Many business decisions are based on the forecast results. Thus, any error in the forecast might result in huge loss.