Question

This type of analysis is most appropriate when the past is a good predictor of the future?

Short answer

Time series analysis is most appropriate when the past is a good predictor of the future.

Step-by-step solution

Definition of Time series analysis

Time seriesanalysis attempt to predict long-run supported past data. For instance, sales figures collected for the past five weeks are often used to forecast sales for the sixth week.

Quarterly sales figures collected for the past years are often accustomed forecast future quarters. In selecting a forecasting model, there are other issues like the firm’s degree of flexibility.

Explanation of time series analysis

Time seriesanalysis is simplest when employed in short-term forecasting because shorter time horizons are easier to forecast with more accuracy. Time series forecasting is the use of a model to predict future values supported by previously observed values. Time series analysis is used for the data, like economics, weather, stock price, and retail sales.