Seasonal Decomposition Output Essay Example | Topics and Well Written Essays - 1750 words

Seasonal Decomposition Output - Essay Example 1. An insurance company is examining its automobile collision claims in order to understand what factors might contribute to the size of a claim. It analyzes data from 40 claims, including the year and model of the car, the age of the driver, the weather conditions, and other information from the police report. Considering what you have studied so far in BUS 305, suggest an analytical process that would be appropriate for the insurance company to use to predict the size of a claim. Support your suggestion with explanations.   Regression analysis is the most appropriate analytical process that would help predict the size of the claim. The analytical process is appropriate since it estimates the relationship between the variables   2. Exhibit 3 provides time series data. Create a time series plot of this data. In your essay, describe the features you find and explain which of these four forecasting methods—linear trend, nonlinear trend, seasonal decomposition, or simple exponential smoothing—would be best suited for forecasting.   The values of Y exhibit an upward trend i.e. the values have maintained a steady increase thus the linear trend would be more appropriate to be used for the forecasting purposes. The forecasting equation for the linear trend model is given as:   Where  is the time index? The parameters  and  (the "intercept" and "slope" of the trend line) are usually estimated via a simple regression in which Y is the dependent variable and the time index t is the independent variable.