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07a Linear Correlation & Regression (I)

Linear Correlation and Regression (I) documents two examples of using linear regression to model relationships between variables. In the first example, a supermarket wants to use shelf space (sqft) to predict weekly sales ($100) of pet food using data from 12 stores. The regression line equation is calculated and the slope interprets the change in sales associated with an additional unit of shelf space. There is evidence of a linear relationship between the variables. The second example examines the relationship between customer checkout times (minutes) and purchase values (dollars) using data from 10 customers. The correlation coefficient and percentage of variation in time explained by value is calculated. An F-test determines if the regression model is useful.

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11 views

07a Linear Correlation & Regression (I)

Linear Correlation and Regression (I) documents two examples of using linear regression to model relationships between variables. In the first example, a supermarket wants to use shelf space (sqft) to predict weekly sales ($100) of pet food using data from 12 stores. The regression line equation is calculated and the slope interprets the change in sales associated with an additional unit of shelf space. There is evidence of a linear relationship between the variables. The second example examines the relationship between customer checkout times (minutes) and purchase values (dollars) using data from 10 customers. The correlation coefficient and percentage of variation in time explained by value is calculated. An F-test determines if the regression model is useful.

Uploaded by

ng louis
Copyright
© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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Linear Correlation and Regression (I)

1. The marketing manager of a large supermarket chain would like to use shelf
space (sq.ft.) to predict the weekly sales($100) of pet food. A random sample
of 12 stores is selected giving the following EXCEL results :

Store Sales Space Coefficients Standard Error


1 1.6 5 Intercept ? 0.2178
2 2.2 5
3 1.4 5 X Variable 1 0.074 0.0159
4 1.9 10
5 2.4 10
6 2.6 10
7 2.3 15
8 2.7 15
9 2.8 15
10 2.6 20
11 2.9 20
12 3.1 20
mean 2.375 12.5
sd 0.522 5.839

(a) Find the equation of the regression line using the method of least squares.
(b) Interpret the meaning of the slope in this problem.
(c) Is there evidence of a linear relationship between shelf space and sales ?
(d) Predict the mean weekly sales of pet food for stores with 8 sq ft of shelf space.
2. The customer checkout times (minutes) and the corresponding values of
purchases (dollars) in a supermarket are shown below.

Time Value Coefficients Standard Error


3.6 30.6 Intercept 0.6202 0.2501
4.1 30.5
0.8 2.4 X Variable 1 0.1092 ?
5.7 42.2
3.4 21.8
1.8 6.2
4.3 40.1
0.2 2.0
2.6 15.5
1.3 6.5
mean 2.78 19.78
sd 1.74 15.45

(a) Find the value of the correlation coefficient.


(b) What percentage of checkout time is explained by value of purchase ?
(c) State the amount of total variation, SST.
(d) State the amount of unexplained variation, SSE.
(e) Perform an F-test to determine if the model is useful.

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