1. Today we are going back in time to help us predict the future!!!

2. Time Series Analysis

3. The End Result

4. Lesson Objectives To understand what Time Series Analysis is
To be able to calculate Moving Averages
To be able to calculate Variations
To evaluate how Time Series Analysis can aid management decision making

5. Forecasting

8. Identifying the Trend

13. Work out the moving average for the below figures:
1991
1992
1993
1994
1995
1996
1997
1990
1999
2000
300
500
600
550
750
850
1,100
800

14. Work out the moving average for the below figures:
1991
1992
1993
1994
1995
1996
1997
1990
1999
2000
300
500
600
550
750
850
1,100
800
1991
1992
1993
1994
1995
1996
1997
1990
1999
2000
300
500
600
550
750
850
1,100
800
466.7
550 3

15. The Answer
1991
1992
1993
1994
1995
1996
1997
1990
1999
2000
300
500
600
550
750
850
1,100
800
467
583
633
733
900
917
1000

16. TASK TIME Draw the graph (on graph paper): Show sales
Show the 3 point moving average

17. The Graph

18. Year
Sales £000 1 50 2 60 3 48 4 55 5 70 6 7 8 75 9 10
Year
Sales £000 1 40 2 30 3 70 4 45 5 35 6 75 7 60 8 9 85 10 11 50 12 90

20. The Graph

21. The 4 Point Moving Average

24. TASK
Calculate the 3 and 4 period moving averages for as many years as you can to complete the table
Plot the sales figures and both trend lines onto a graph using graph paper.
Comment on the relationship between the trend and the actual sales figures.

25. Period 1 2 3 4 5 6 7 8 9 10
Sales
100
130
160
175
180
190
220
250
3 period
4 period

26. Period 1 2 3 4 5 6 7 8 9 10
Sales
100
130
160
175
180
190
220
250
3 period
155
172
182
187
197
217
4 period

27. Period 1 2 3 4 5 6 7 8 9 10
Sales
100
130
160
175
180
190
220
250
4 point
8 Point
4 Point Average
565
645
705
735
740
780
840
1210
1350
1440
1475
1520
1620

28. Variation
Variation = Actual Data – Trend Data

31. Seasonal Variation

35. 1 9 7 8 2 Q 3 4
115
101
112 80
105
130
140
125

36. Yr 1 9 7 8 2 Q 3 4
150
175
130
115
125
145
135
100
136
160

37. Yr 1 9 7 8 2 Q 3 4
250
275
240
255
230
260
220
180
195
170
140
155

38. Advantages of TSA

39. Disadvantages of TSA

40. Evaluate how TSA might assist managerial decision making
Quick Question
Evaluate how TSA might assist managerial decision making