Residual-Based Statistical Process Control Charts in the Presence of Multicollinearity: an EWMA Framework with (RK) Estimator
(rk) class estimator; EWMA; Multicollinearity; Process control; Regression control chart; Residual control chart
Reliability monitoring of financial health requires strong control mechanisms, and the residual chart is an invaluable instrument to perform it. One of the key problems statisticians face while modeling is the problem of multicollinearity which arises when there is a strong correlation between independent variables leading to imprecise coefficient estimates and poor outcomes. To solve this problem and to make sure that the control chart works even with correlated data, we integrated a Weighted Moving Average Exponential smoothing chart within the modeling technique. The theoretical approach assures long-term variability and consistency of the residual control chart. These control charts are used to understand the process and the performances in various sectors. The charts can be used as analytical instruments to help recognize patterns, variations, or anomalies in economic indicators specifically in budget deficit data and facilitate rapid identification of any changes or inconsistencies in the fiscal deficit by policymakers. Further advances in statistical process control are rendered feasible by this study, which deepens the understanding and awareness of the potential uses and implications of the Weighted Moving Average Exponential smoothing chart for fiscal deficit data in the Economic realm. The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2024.
Lecture Notes in Networks and Systems, Vol-1085 LNNS, pp. 327-340.
Springer Science and Business Media Deutschland GmbH
Nancy M., Department of Statistics and Data Science, Christ University, Bangalore, India; Joshi H., Department of Statistics and Data Science, Christ University, Bangalore, India