What is time series analysis?
A series of figures recorded over a period of time. Most of them are made of patterns that help us to predict the future.
Components of a time series…
Trend-underlying movement in a consistent direction over a period of time
Seasonal variation-predictable, recurring fluctuations over the short term
Cyclical variation-recurring patterns but tend to occur over a longer period
Random variation-unpredictable fluctuations caused by random natural disasters or war
What are the two to time series models?
Additive model = trend + seasonal variation
Multiplication model = trend x seasonal variation
What is de-seasonalising data?
When seasonal variations are removed to leave the trend
What is the formula for the line of best fit?
Y=a+bx
This is also the same as tc=fc+(vc x no.)
What is the formula for index numbers?
Current period figure/base period figure x 100
(This turns money into a number so it is easier to analyse)
What 5 stages are in the production life cycle?
Development-high costs with no revenue so negative cash flow
Introduction-high costs and low revenue so negative cash flow
Growth-falling unit costs (bulk discounts) and increasing revenue (faster production) means it’s profitable
Maturity-high demand and sales but growth has slowed, should still be profitable
Decline-falling demand and market share leading to a loss
