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The document is a question bank on Business Statistics covering key concepts such as MAPE, MAE, and time series components including trend, seasonal variation, cyclical variation, and irregular variation. It explains the definitions and examples of these components, as well as methods for studying them. Additionally, it outlines the additive and multiplicative models of time series.

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5 views6 pages

1-5 Answers

The document is a question bank on Business Statistics covering key concepts such as MAPE, MAE, and time series components including trend, seasonal variation, cyclical variation, and irregular variation. It explains the definitions and examples of these components, as well as methods for studying them. Additionally, it outlines the additive and multiplicative models of time series.

Uploaded by

bhupathib316
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Question Bank-2

Business Statistics

1. Write the formula to evaluate MAPE.(2marks)


MAPE stands for Mean Absolute Percentage Error. It is a
commonly used measure to assess the accuracy of a forecast or
prediction model by comparing the actual values with the forecasted
values.

2. Write the formula for MAE.(2marks).

MAE stands for Mean Absolute Error. It measures the average


magnitude of errors between actual values and forecasted values, without
considering their direction (i.e., it treats all errors equally).

3. Define Time series with example.(2marks)


A time series is a sequence of data points collected, recorded, or
observed at successive points of time, usually at equal intervals
(e.g., daily, monthly, yearly).
It reflects how a particular variable changes over time.

4. Explain the components of Timeseries with example.(20 marks)


Components of Time Series

1. Trend (T)

Definition:
The trend component reflects the long-term movement or direction in
the data over a substantial period. It may be upward, downward, or
stable.

Types of Trend:

Linear Trend: Constant rate of increase or decrease.

Non-linear Trend: Varies at a changing rate (e.g., exponential).

Example:
Consider the annual population (in lakhs) of a town over 6 years:
2. Seasonal Variation (S)

Definition:
These are short-term, regular, and periodic fluctuations in a time
series data that repeat after a fixed interval (e.g., daily, monthly,
quarterly). They are due to seasonal or institutional factors like
weather, festivals, or school terms.

3. Cyclical Variation (C)

Definition:
Cyclical variation refers to long-term oscillations about the trend line
caused by economic or business cycles such as boom, recession, or
recovery. These cycles do not have fixed duration.

Example:
GDP data over 10 years may show fluctuations such as growth for 3 years,
followed by slowdown and recovery—this forms a cycle.
4. Irregular or Random Variation (I)

Definition:
Irregular variations are caused by unpredictable, one-time events
such as strikes, wars, pandemics, or natural disasters. These do not
follow any pattern.

Example:
Sales of a restaurant before and during COVID-19:

Summary Table of methods of studying each components of timeseries:


Compon
Methods
ent

Trend Free-hand, Semi-average, Moving average, Least squares

Simple averages, Ratio to trend, Ratio to moving average, Link


Seasonal
relatives

Cyclical Residual method, Curve fitting

Irregular Residual analysis, Smoothing techniques

5. Write the additive and multiplicative models of Time series.(2marks)


Mathematical Form of Additive Model:

The model can be used ,

· When the magnitude of seasonal and cyclical fluctuations does not


change over time.

· For linear or stable systems.

Mathematical Form of Multiplicative Model:

The model can be used,

· When seasonal, cyclical, or irregular fluctuations increase or decrease


proportionally with the trend.

· in financial or economic data where growth is exponential or


percentage-based.

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