Goa Institute of Management

ASRM 2023-24.
Linear Regression Analysis Class Problems ( Data is from the Internet Google se

1. A company sets different prices for a particular stereo

different regions of the country. The accompanying table
numbers of units sold and the corresponding prices (in hu

SALES 420 380 350 400 440

PRICE 5.5 6 6.5 6 5

(a) Plot these data, and estimate the linear regression of sales o
(b) What effect would you expect a Rs. 100 increase in price to h

SALES PRICE SUMMARY OUTPUT

420 5.5
380 6 Regression Statistics
350 6.5 Multiple R
400 6 R Square
440 5 Adjusted R Square
380 6.5 Standard Error
450 4.5 Observations
420 5
ANOVA

Regression
Residual
Total

Coefficients
Intercept
SALES

RESIDUAL OUTPUT

Observation
1
2
3
4
5
6
7
8
from the Internet Google search 12 August 2023.) This is only for the internal usage.

particular stereo system in eight

companying table shows the
nding prices (in hundreds of Rs. s).

Y
380 450 420 X-> SALES PRICE
6.5 4.5 5 SALES 1
PRICE -0.937137 1

regression of sales on price.

ncrease in price to have on sales?

ression Statistics
0.937137
0.878226
0.85793
0.280439
8

df SS MS F Significance F
1 3.403125 3.403125 43.27152 0.000592
6 0.471875 0.078646
7 3.875

Coefficients
Standard Error t Stat P-value Lower 95%Upper 95%Lower 95.0%
Upper 95.0%
13.97812 1.273702 10.97441 3.401E-05 10.86149 17.09476 10.86149 17.09476
-0.020625 0.003135 -6.578109 0.000592 -0.028297 -0.012953 -0.028297 -0.012953

Predicted PRICE
Residuals
5.315625 0.184375
6.140625 -0.140625
6.759375 -0.259375
5.728125 0.271875
4.903125 0.096875
6.140625 0.359375
4.696875 -0.196875
5.315625 -0.315625
 SALES Line Fit Plot
8
6
4 PRICE
PRICE

Predicted PRICE
2
0
340 360 380 400 420 440 460
SALES

Y = MX + C
Y= -0.02X + 13.97
On Friday, November 13, 1989, prices on the BSE Exchange fell
steeply; the Standard and Poors 500-share index was down 6.1%
on that day. The accompanying table shows the percentage losses
(y) of the twenty-five largest mutual funds on November 13, 1989
Also shown are the percentage gains (x), assuming reinvested
dividends and capital gains, for these same funds for 1989, throug
November 12.

y x y x y x
4.7 38 6.4 39.5 4.2 24.7
4.7 24.5 3.3 23.3 3.3 18.7
4 21.5 3.6 28 4.1 36.8
4.7 30.8 4.7 30.8 6 31.2
3 20.3 4.4 32.9 5.8 50.9
4.4 24 5.4 30.3 4.9 30.7
5 29.6 3 19.9 3.8 20.3
3.3 19.4 4.9 24.6
3.8 25.6 5.2 32.3
(a) Estimate the linear regression of November 13 losses on pre-November
Interpret the slope of the sample regression line.
 SE Exchange fell
ex was down 6.1%
e percentage losses
November 13, 1989.
ming reinvested
ds for 1989, through

sses on pre-November 13, 1989, gains.

3. For a period of 11 years, the figures in the accompanying table
annual change in unemployment rate and annual change in me
absence rate due to own illness.

Change
In
Change
Mean
In
Employ
ee
Absenc
Unemplo e Rate
yment Due To
Own
Year Rate Illness
1 -0.2 0.2
2 -0.1 0.2
3 1.4 0.2
4 1 -0.4
5 -0.3 -0.1
6 -0.7 0.2
7 0.7 -0.1
8 2.9 -0.8
9 -0.8 0.2
10 -0.7 0.2
11 -1 0.2

(a) Estimate the linear regression of change in mean employee absence rate
(b) Interpret the estimated slope of the regression line.
ccompanying table were found for
nnual change in mean employee
wn illness.

mployee absence rate due to own illness on change in unemployment rate.

 An attempt was made to evaluate the forward rate as a predictor of the spot
y = .00027 + .7916x
was obtained, where
y = Actual change in the spot rate
x = change in the forward rate
The coefficient of determination was 0.097, and the estimated standard devia
(a) Interpret the slope of the estimated regression line.
(b) Interpret the coefficient of determination.
(c) Test the null hypothesis that the slope of the population regression line
(d) Test against a two-sided alternative the null hypothesis that the slope o
predictor of the spot rate in the Canadian treasury bill market. For a sample of seventy-nine quarterly o

mated standard deviation of the estimator of the slope of the population regression line was 0.2759.

ation regression line is 0 against the alternative that the true slope is positive, and interpret your resu
hesis that the slope of the population regression line is 1, and interpret your result.
eventy-nine quarterly observations, the estimated linear regression:

on line was 0.2759.

and interpret your result.

 The marketing manager of a large supermarket chain would like t
determine the effect of shelf space on the sales of pet food. A
random sample of 12 equal-sized stores is selected with the
following results:

WEEKLY WEEKLY
SHELF SALES, Y SHELF SALES, Y
STORE SPACE, X (HUNDR STORE SPACE, X (HUNDR
(FEET) EDS OF (FEET) EDS OF
RS. S) RS. S)

1 5 1.6 7 15 2.3
2 5 2.2 8 15 2.7
3 5 1.4 9 15 2.8
4 10 1.9 10 20 2.6
5 10 2.4 11 20 2.9
6 10 2.6 12 20 3.1

(a) Set up a scatter diagram.

(b) Assuming a linear relationship, use the least-squares method to find th
̂ 0 and
.
̂ 1 (c) Interpret the meaning of the slope
in this problem.
̂ 1
(d) Predict the average weekly sales (in hundreds of Rs. s) of pet food for
(e) Suppose that sales in store 12 are 2.6. Do parts (a)-(d) with this value
What shelf space would you recommend that the marketing manager allocate to pet
et chain would like to
s of pet food. A
cted with the

uares method to find the regression coefficients

f Rs. s) of pet food for stores with 8 feet of shelf space for pet food.
(a)-(d) with this value and compare the results,
manager allocate to pet food? Explain.