The following table shows the property damaged by road accidents in Punjab for the year 1973 to 1979.

Year 1973 1974 1975 1976 1977 1978 1979

Property Damage 201 238 392 507 484 648 742

1. Obtain the semi-averages trend line

2. Find out the trend values.
The following table gives the number of books in thousands sold at a book store for the year 1973 to 1981

Year 1973 1974 1975 1976 1977 1978 1979 1980 1981

No. of Books Sold 42 38 35 25 32 24 20 19 17

1. Find the equation of the semi-averages trend line

2. Compute the trend values
3. Estimate the number of books sold for the year 1982.
Solution: Let x=t-1973

No. of Books
Year Semi Total Semi Average Coded Year Trend Values
Sold

1973 42 0 39.5

1974 38 1 36.5
140 35
1975 35 2 33.5

1976 25 3 30.5

1977 32 4 27.5

1978 24 5 24.5

1979 20 6 21.5
80 20
1980 19 7 18.5

1981 17 8 15.5
Example:
Measure the trend by the method of semi-averages by using the table given below. Also write the equation of the trend line with
origin at 1984-85.
Years Value in Million
1984 – 85 18.6
1985 – 86 22.6
1986 – 87 38.1
1987 – 88 40.9
1988 – 89 41.4
1989 – 90 40.1
1990 – 91 46.6
1991 – 92 60.7
1992 – 93 57.2
1993 – 94 53.4
Solution: x=t-1982
 Year Sales Semi Total Semi Average Coded Year Trend Values

1982 10 0 9

1983 12 33 11 1 11

1984 11 2 13

1985 16 3 15

1986 15 51 17 4 17

1987 20 5 19

b = 4(S2-S1)/n2= 4(51-33)/36=2

Method of Least Squares

The line of best fit is a line from which the sum of the deviations of various points is zero. This is the best method for obtaining
the trend values. It gives a convenient basis for calculating the line of best fit for the time series. It is a mathematical method
for measuring trend. Further the sum of the squares of these deviations would be least when compared with other fitting
methods. So, this method is known as the Method of Least Squares and satisfies the following conditions:
(i) The sum of the deviations of the actual values of Y and Ŷ (estimated value of Y) is Zero. that is Σ(Y–Ŷ) = 0.
(ii) The sum of squares of the deviations of the actual values of Y and Ŷ (estimated value of Y) is least. that is Σ(Y–Ŷ)2 is least
;
Procedure:

(i) The straight line trend is represented by the equation Y = a + bX …(1)

where Y is the actual value, X is time, a, b are constants

(ii) The constants ‘a’ and ‘b’ are estimated by solving the following two normal
Equations ΣY = n a + b ΣX ...(2)

ΣXY = a ΣX + b ΣX2 ...(3)

Where ‘n’ = number of years given in the data.

(iii) By taking the mid-point of the time as the origin, we get ΣX = 0

(iv) When ΣX = 0 , the two normal equations reduces to

The constant ‘a’ gives the mean of Y and ‘b’ gives the rate of change (slope).
(v) By substituting the values of ‘a’ and ‘b’ in the trend equation (1), we get the Line of Best Fit.

Example:
Given below are the data relating to the production of sugarcane in a district.
Fit a straight line trend by the method of least squares and tabulate the trend values.

Solution:
Computation of trend values by the method of least squares (ODD Years).
Therefore, the required equation of the straight line trend is given by

Y = a+bX;
Y = 45.143 + 1.036 (x-2003)

The trend values can be obtained by

When X = 2000 , Yt = 45.143 + 1.036(2000–2003) = 42.035
When X = 2001, Yt = 45.143 + 1.036(2001–2003) = 43.071,
similarly other values can be obtained.

Example
Given below are the data relating to the sales of a product in a district.

Fit a straight line trend by the method of least squares and tabulate the trend values.

Solution:
Computation of trend values by the method of least squares.
In case of EVEN number of years, let us consider
similarly other values can be obtained.

Ex. 1
Ex. 2

Ex. 3 Fit a straight line trend on the following data using the Least Squares Method.

Period
1996 1997 1998 1999 2000 2001 2002 2003 2004
(year)

Y 4 7 7 8 9 11 13 14 17