Date post: | 21-Jul-2015 |
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• Clearly, there is an exponentially increasing trend. • The graph also indicates the presence of seasonality.
• Month plot suggests that the number of passengers decreases from January to February and increases until it reaches its peak in July.
• It then experiences a fall in number until November and increases again in December.
The variation in the seasonal pattern appears to be proportional to the level of the time series.
Therefore, a multiplicative model is more appropriate.
Box-Cox transformation is done to transform the data until the variation in the series becomes stable over time, so that Holt Winters Additive model can be applied.