A manager of a local coffee shop analyzes the relationship between advertising a

ID: 2908799 • Letter: A

Question

A manager of a local coffee shop analyzes the relationship between advertising and sales by reviewing the store’s data for the previous six months.

Calculate the mean of advertising and the mean of sales. (Round your answers to 2 decimal places.)

Calculate the standard deviation of advertising and the standard deviation of sales. (Round your answers to 2 decimal places.)

Interpret the covariance between advertising and sales.

Calculate the correlation coefficient between advertising and sales. (Round your answer to 2 decimal places.)

Interpret the correlation coefficient between advertising and sales.

A manager of a local coffee shop analyzes the relationship between advertising and sales by reviewing the store’s data for the previous six months.

Sol:

use excel functions to get the answers:

Advertising data is from B2:B7 and sales data is from C2:C7

To get averge of advertising

=AVERAGE(B2:B7)

=25

To get averge of sales

=AVERAGE(C2:C7)

=18

Solutionb:

To get stddev for advertsing

=STDEV.S(B2:B7)

=3.577709

To get stddev for sales

=STDEV.S(C2:C7)

=2.097618

Solutionc-1

use excelfunction covariance .s

=COVARIANCE.S(B2:B7;C2:C7)

COVARIANCE=7

Since covariance is large and positive there is positive relationship

Solutionc2:

Solutiond-1=CORREL(B2:B7;C2:C7)

r=0.93

there exists a strong positive correlation

Mean Advertising 25 Sales 18

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