Page 306 - DECO504_STATISTICAL_METHODS_IN_ECONOMICS_ENGLISH

Unit 23 : Time Series Methods—Graphic, Method of Semi-averages

Solution: Notes
Calculation of Trend Values by the Method of Semi-Averages

Months Sales in tonnes
January 280
February 300 1,650, (Total of
March 280 first six months)
April 280
May 270
June 240
July 230
August 230 1,290, (Total of
September 220 last six months)
October 200
November 210
December 200

1650
Average of the first half = = 275 tonnes.
6
1290
Average of the second half = = 215 tonnes.
6
These two figures, namely, 275 and 215, shall be plotted at the middle of their respective
periods, i.e., at the middle of March-April and that of September-October, 1997. By
joining these two points we get a trend line which describes the given data.

305
290
TONNES 275 TREND LINE
260
IN 245 ACTUAL
DATA
SALES 230
215
200
0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

MONTHS
Merits of Semi-average Method

Merits
1. This method is simple to understand compared to the moving average method and the method
of least squares.
2. This is an objective method of measuring trend as everyone who applies the method is bound
to get the same result (of course, leaving aside the arithmetic mistakes).

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