Problem

Souvenir Sales: The file SouvenirSales.csv contains monthly sales for a souvenir shop at a beach resort town in Queensland, Australia, between 1995-2001. (Source: Hyndman, R.J., Time Series Data Library. Accessed on 07/25/15.) Back in 2001, the store wanted to use the data to forecast sales for the next 12 months (year 2002). They hired an analyst to generate forecasts. The analyst first partitioned the data into training and validation sets, with the validation set containing

the last 12 months of data (year 2001). She then fit a regression model to sales, using the training set.

a. Create a well-formatted time plot of the data.

b. Change the scale on the x-axis, or on the y-axis, or on both to log-scale in order to achieve a linear relationship. Select the time plot that seems most linear.

c. Comparing the two-time plots, what can be said about the type of trend in the data?

d. Why were the data partitioned? Partition the data into the training and validation set as explained above.