When preparing data for a predictive modeling project, a data scientist notices that the categorical variable 'payment_type' with four categories ('credit card', 'debit card', 'paypal', 'other') exhibits a high degree of variability in the outcome variable (purchase amount). To improve the model's predictive accuracy, what strategy can the data scientist use to handle the 'payment_type' variable?
You are conducting a time series analysis and need to estimate the parameters of an ARIMA (Autoregressive Integrated Moving Average) model to forecast future sales. Given that the data show signs of non-stationarity and seasonality, which parameter estimation method should you use for the best results?
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