Question

Which of the following are correct?
(A) Time series analysis does not help to understand the behavior of a variable in the past.
(B) Time series predict the future behavior of variable.
(C) Time series helps to plan future operations.
(D) The main aim of the time series analysis is to derive conclusions after arranging the time series in a systematic manner.

• A. (A), (B) and (D) only
• B. (A), (B) and (C) only
• C. (B), (C) and (D) only
• D. (C) and (D) only

Hint:

Remember the core objectives of time series analysis: (1) Understand the past by identifying components like trend and seasonality. (2) Use this understanding to forecast the future. (3) Use the forecasts to make better decisions and plans.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
This question assesses the understanding of the purpose and applications of time series analysis. Time series analysis involves analyzing a sequence of data points collected over time to identify patterns and make forecasts.
Step 2: Detailed Explanation:
Let's analyze each statement:
(A) Time series analysis does not help to understand the behavior of a variable in the past. This statement is incorrect. The very first step and a primary goal of time series analysis is to study past data to identify patterns like trends, seasonality, and cycles. Understanding the past is crucial for forecasting the future.
(B) Time series predict the future behavior of variable. This statement is correct. One of the main applications of time series analysis is forecasting. By identifying the underlying patterns in past data, models can be built to extrapolate these patterns and predict future values.
(C) Time series helps to plan future operations. This statement is correct. Businesses heavily rely on time series forecasts (e.g., for sales, demand) to plan for the future. This includes planning inventory levels, production schedules, staffing, and budgeting.
(D) The main aim of the time series analysis is to derive conclusions after arranging the time series in a systematic manner. This statement is correct. Time series data is chronological. By arranging it systematically and analyzing it, we can derive conclusions about the underlying forces that affect the variable and its behavior over time.
Step 3: Final Answer:
Statements (B), (C), and (D) are correct descriptions of the purpose and utility of time series analysis. Statement (A) is incorrect. Therefore, the correct option is (C).