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Price($) Promotional exp(K) Quality City:1/Suburban:0 Sales(K) 949 5 100 1 168 9

ID: 3222625 • Letter: P

Question

Price($)

Promotional exp(K)

Quality

City:1/Suburban:0

Sales(K)

949

5

100

1

168

941

4.3

94

0

150

934

3

89

1

168

921

2

85

0

148

915

0.75

79

1

152

909

4.8

75

0

162

904

3.6

70

1

160

1014

3

63

1

123

1006

1.5

60

0

130

990

0.7

55

0

116

978

4.7

51

1

142

962

3.5

47

0

145

955

2.8

42

1

134

953

1.3

35

0

128

1050

0.25

30

1

117

1040

4.5

26

1

118

1038

3.2

22

0

107

1022

2.4

17

0

124

1021

1.2

12

1

104

1018

0

6

0

106

Please consider the data presented above for the monthly sales of Ever-cool brand of refrigerators in 1,000s of dollars and answer the following questions:

Independent variables are

Price (in dollars); Promotional Expenditure (in 1,000s of dollars); Quality of service (scale of 1-10); location (categorical variable: city area: 1; suburban area: 0).

a. Based on the relevant residual plots, do you see any evidence of violation of assumptions (Linearity, Normality, Equal variance)?

b. State the multiple regression equation and interpret the meaning of the slopes, b1, b2, b3, and b4.

c. At the 0.05 level of significance, determine whether each independent variable makes a significant contribution to the regression model. On the basis of these results, indicate the independent variables to include in this model. (Based on t - test results)

d. Construct a 95% confidence interval estimate of the population slope between Quality and the monthly sales () (please note that Minitab can’t do this directly, however you may use the relevant information from Minitab output and then construct the confidence interval manually)

e. Perform the overall F- test and comment on the significance of the model.

Please follow the following instructions:

Use Excel/ or Minitab to run the analysis.

Price($)

Promotional exp(K)

Quality

City:1/Suburban:0

Sales(K)

949

5

100

1

168

941

4.3

94

0

150

934

3

89

1

168

921

2

85

0

148

915

0.75

79

1

152

909

4.8

75

0

162

904

3.6

70

1

160

1014

3

63

1

123

1006

1.5

60

0

130

990

0.7

55

0

116

978

4.7

51

1

142

962

3.5

47

0

145

955

2.8

42

1

134

953

1.3

35

0

128

1050

0.25

30

1

117

1040

4.5

26

1

118

1038

3.2

22

0

107

1022

2.4

17

0

124

1021

1.2

12

1

104

1018

0

6

0

106

Explanation / Answer

SUMMARY OUTPUT Regression Statistics Multiple R 0.94863 R Square 0.899899 Adjusted R Square 0.873205 Standard Error 7.426158 Observations 20 ANOVA df SS MS F Significance F Regression 4 7436.583 1859.146 33.71204 2.47E-07 Residual 15 827.2173 55.14782 Total 19 8263.8 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept 327.9547 57.66385 5.687353 4.31E-05 205.0471 450.8623 205.0471 450.8623 Price($) -0.22204 0.055369 -4.0102 0.001136 -0.34006 -0.10403 -0.34006 -0.10403 Promotional exp(K) 2.841239 1.185589 2.39648 0.030031 0.314217 5.368261 0.314217 5.368261 Quality 0.274701 0.09661 2.843389 0.01233 0.068781 0.480621 0.068781 0.480621 City:1/Suburban:0 3.737943 3.402595 1.098557 0.289282 -3.51452 10.9904 -3.51452 10.9904

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