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Lesson 3 Assignment

The Jollibee Foods Corporation believes its sales are directly related to promotional expenditures. Data from the past 10 years shows a positive correlation between the two variables. Regression analysis yielded the equation y = 2.57X + 55.31 to model this relationship, with an R^2 value of 0.905 indicating a strong fit. Based on this model, projected sales for a promotional expenditure of P2,750,000 is P12,598,500. Confidence and prediction intervals were also determined to quantify uncertainty in projections.

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Kim Patrick Victoria
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143 views

Lesson 3 Assignment

The Jollibee Foods Corporation believes its sales are directly related to promotional expenditures. Data from the past 10 years shows a positive correlation between the two variables. Regression analysis yielded the equation y = 2.57X + 55.31 to model this relationship, with an R^2 value of 0.905 indicating a strong fit. Based on this model, projected sales for a promotional expenditure of P2,750,000 is P12,598,500. Confidence and prediction intervals were also determined to quantify uncertainty in projections.

Uploaded by

Kim Patrick Victoria
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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The Jollibee Food believes its sales are directly related to the amount of

money its speneds on promotion. The company has accumulated the following
data on promotional expenditures and sales for the past 10 years.

Promtional
Expenditures Annual Sales
(P 100,000) (P 100,000)
8 65
14 90
10 84
13 95
15 97
18 100
19 105
20 111
24 120
29 123

Q1 Develop the Regression Equation


Q2 Solve for the Sum of Squares for Error, Standard Error and Coefficient of Determinatio
Q3 For promotional expenditure of P2,750,000, what will be the projected sales
Q4 Find the 99% confidence interval for promotional expenditure of P 3,250,000
Q5 Determine the 99% prediction interval with promotional expenditure of P3,250,000

Solution
y = a + bX or y = a +b1x

Year X Y X^2 Y^2 XY


1 8 65 64.00 4,225.00 520.00
2 14 90 196.00 8,100.00 1,260.00
3 10 84 100.00 7,056.00 840.00
4 13 95 169.00 9,025.00 1,235.00
5 15 97 225.00 9,409.00 1,455.00
6 18 100 324.00 10,000.00 1,800.00
7 19 105 361.00 11,025.00 1,995.00
8 20 111 400.00 12,321.00 2,220.00
9 24 120 576.00 14,400.00 2,880.00
10 29 123 841.00 15,129.00 3,567.00
Total 170.00 990.00 3,256.00 100,690.00 17,772.00
b1=n( ΣXY) - (ΣX)(ΣY) b0 = barY - b1(bar X)
n (ΣX^2) -(ΣX)^2

b1 = 10 (17772) - (170)(990)
10 (3256) - (170)^2
b1 = 2.57 Bar X x/n
17.00

Bar Y Y/n
99.00
From y = a + bx
bar y = a + b (bar X)
a = bar y - b (bar X)
substitute value of bar y, bar x and b

a = 99 - 2.57 (17)
= 55.31

Regression Equation is y = a + bx
y = 55.31 + 2.57X
y = 2.57X + 55.31

Promotional
Sale
Expenditure
(in P100,000)
(in P100,000)

27.5 125.985
Answer: y = 2.75X + 55.31
oefficient of Determination
projected sales Answer: P 12,598,500.00
e of P 3,250,000
enditure of P3,250,000
Q2. Solve for the Sum of Squares for Error, Standard Error and Coefficient of Determination

Bar Y Year X Y (Yi-Y) (Yi-Y)2 Yi

99.00 1 8 65 - 34.00 1,156.00 75.87


99.00 2 14 90 - 9.00 81.00 91.29
99.00 3 10 84 - 15.00 225.00 81.01
99.00 4 13 95 - 4.00 16.00 88.72
99.00 5 15 97 - 2.00 4.00 93.86
99.00 6 18 100 1.00 1.00 101.57
99.00 7 19 105 6.00 36.00 104.14
99.00 8 20 111 12.00 144.00 106.71
99.00 9 24 120 21.00 441.00 116.99
99.00 10 29 123 24.00 576.00 129.84
TOTAL 170.00 990.00 - 2,680.00 990.00

A. Sum of Squares Total, SST 2,680.00

B. Sum of Square for Error, SSE 255.51

C. Standard Error of Estimate

=√ SSE / (n-2)

=√ 255.51 / (10 -2) 31.93875


= 5.65

D. Coefficient of determination, r^2


= 1 - (SSE / SST)

= 1 - (255.51 / 2680)

r^2 = .905

Q4. Find the 99% confidence interval for promotional expenditure of P 3,250,000
y = 2.57X + 55.31

Y Prime = 2.57 (32.5) + 55.31


= 138.84
S sub E, Standard Error = 5.65
Determine value of t @ 99% Confidence
df = n - 2
df = 10 - 2
df = 8
therefore, t = 3.355

Confidence Interval = 138.84 +/- (3.355) (5.65) (0.8697)

Confidence Interval = 138.84 + 16.49 155.33

Confidence Interval = 138.84 - 16.49 122.35

Q5. Determine the 99% prediction interval with promotional expenditure of P3,250,000
= 138.84 +/- (3.355)(5.65)(1.3674)

Positive = 138.84 + 25.92 = 164.76


Negative = 138.84 - 25.92 = 112.92
(Yi-Yi) (Yi-Yi)2

- 10.87 118.16
- 1.29 1.66
2.99 8.94
6.28 39.44
3.14 9.86
- 1.57 2.46
0.86 0.74
4.29 18.40
3.01 9.06
- 6.84 46.79
- 0.00 255.51

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