Using the statement of below illustration estimate the value for 1996 by applying method of semi averages

Question: Using the statement of below illustration estimate the value for 1996 by applying method of semi averages.

homework solution

Solution:

Here n = 9, and hence the two parts will be 1987 to 1990 and 1992 to 1995. As n is a odd number we will ignore the middle year of the series, i.e. 1991.

miaverge

Here these miaverage 21.75 is to be plotted against the middle of the years 1988 and 1989 and value 26 against the middle of the years 1993 and 1994.

Graph for homeworkk

From the graph we see that the estimated value for 1996 is 27.7. This method assumes the presence of linear trend which may not exist. Semi averages are affected by extreme values. This is a crude and simple way of fitting a trend line, but its simplicity is its advantage.