4. Consider the Quarterly UK passenger car production in thousands of cars from

Question

4. Consider the Quarterly UK passenger car production in thousands of cars from 1977 Q1 to 2005 Q1 inclusive (fpp datasetukcars). The beginning of this series and its Time Plot are displayed below. > ukcars Qtri Qtr2 Otr3 Otr4 1977 338.371 371.851 278.670 343.888 1978 358.491 362.822 261.281 248.355 1979 325.382 316.780 171.153 257.217 1980 298.127 251.464 181.555 192.598 1981 245.652 245.526 225.261 238.211 plot(ukcars, ylab"Production, thousands of cars) 1980 1985 1990 1995 2000 2005 Time a. Describe the patterns observable in the Time Plot. The optimal parameter for the Box-Cox transformation is given below. BoxCox.lambda ukcars) b We will not tranfmis serieselan why not

Explanation / Answer

a) We can observe the following patterns from the Time plot:

1. The yearly production of cars in UK had a downfall till 1981 and increased year by year till 1999. It had a strange downfall in 2000 and saw a small increase thereafter.

2. There has been a seasonal pattern in the production of cars in UK, minimum production was seen in Quarter 3 while most of the production happening in the first two quarters.

b) Transformation of data is done in order to make the data normal so as to make it useful for performing tests. The lambda value calculated tells us the power the variable should be raised for the transformation.  In this case, we don't need to transform the series as the lambda is very close to 1 and hence we don't need to transform our data.

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