Observations are taken on sales of a certain mountain bike in 30 sporting goods

Question

Observations are taken on sales of a certain mountain bike in 30 sporting goods stores. The regression model was Y = total sales (thousands of dollars), X1 = display floor space (square meters), X2 = competitors’ advertising expenditures (thousands of dollars), X3 = advertised price (dollars per unit).

Write the fitted regression equation. (Round your coefficient CompetingAds to 3 decimal places, coefficient Price to 4 decimal places, and other values to 2 decimal places. Negative values should be indicated by a minus sign.)

The coefficient of CompetingAds says that each additional $1,000 of "competitors' advertising expenditures"

The intercept is not meaningful, since a mountain bike cannot sell for zero, which will happen if all the variables are zero.

Make a prediction for Sales when FloorSpace = 61, CompetingAds = 86, and Price = 1,048. (Enter your answer in thousands. Round your answer to 2 decimal places.)

Observations are taken on sales of a certain mountain bike in 30 sporting goods stores. The regression model was Y = total sales (thousands of dollars), X1 = display floor space (square meters), X2 = competitors’ advertising expenditures (thousands of dollars), X3 = advertised price (dollars per unit).

Explanation / Answer

Solution- Fitted regression equation is -

a. Y = 1265.54 + 10.45 * floor space - 6.865 * competing Ads -0.1437 * Price

b.1 As slope of cofficient of floor space is positve and equal to 10.45 so the interpretation should be -

It adds about 10.45 to sales (in thousands of dollars).

b.2 As slope of cofficient of competing ads is negative and equal to -6.865 so the interpretation should be -

It reduces sales by about 6.865 from sales (in thousands of dollars).

b3.  As slope of cofficient of price is negative and equal to -0.1437 so the interpretation should be -

It reduces sales by about 0.1437 from sales (in thousands of dollars).

When all variables are zero, then sales would be equal to intercept value equal to

1265.54

when FloorSpace = 61, CompetingAds = 86, and Price = 1,048

then sales = 1265.54 + 10.45 * 61 - 6.865 * 86 -0.1437 * 1048

= 1162.002

Answers

TY!

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