What do you mean by Time Series ? Explain additive and multiplicative model of time series.
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●A time series is a series of data points indexed (or listed or graphed) in time order.
◆Additive model:
1. Data is represented in terms of addition of seasonality, trend, cyclical and residual components
2. Used where change is measured in absolute quantity
3. Data is modeled as-is
◆Multiplicative model:
1. Data is represented in terms of multiplication of seasonality, trend, cyclical and residual components
2. Used where change is measured in percent(%) change
3. Data is modeled just as additive but after taking logarithm (with base as natural or base 10)
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