3.18 Bartels (1982) illustrated the RVN test for randomness using data on annual changes in stock levels of corporate trading enterprises in Australia for 1968–1969 to 1977–1978. The values (in $A million) deflated by the Australian GDP are 528, 348, 264, 20, 167, 575, 410, 4, 430, 122. He tested randomness against the alternative of autocorrelation.

Random stock-level changes occur when companies are well managed because future demands are accurately anticipated. ‘‘Negative autocorrelation constitutes evidence for a tendency to overreact to shortfalls or excesses in stock levels, whereas positive autocorrelation suggests there is a long delay in reaching desired stock levels.’’ The test statistic is NM¼169, which is not significant. Compare this result with that of

(a) runs up and down, and

(b) runs above and below the sample median.