C The following estimated regression equation was developed after 20 outlets wer

ID: 424536 • Letter: C

Question

The following estimated regression equation was developed after 20 outlets were surveyed.

= 10.1 - 4.7x1 + 6.6x2 + 15.5x3

a. What is the expected amount of sales attributable to the drive-up window?
$ _______________ in thousands

b. Predict sales for a store with two competitors, a population of 8,000 within one mile, and no drive-up window.

Estimate of sales = $_____________ in thousands

c. Predict sales for a store with one competitor, a population of 4,000 within one mile, and a drive-up window.

Estimate of sales = $____________ in thousands

Estimated regression equation = 10.1 - 4.7x1 + 6.6x2 + 15.5x3

Ans a)

The term '15.5x3' shows the expected amount of sales attributable to the drive-up window.

If there is a drive-up window, the value of x3 = 1.

Hence the value of the above term becomes = 15.5 * 1

= $15.5 in thousands

Ans b)

The number of competitors = 2. Hence x1 = 2

The population within one mile = 8,000. Hence x2 becomes 8 as its value is in thousands

No drive-up window. Hence x3 = 0

Putting these values in the equation,

y = 10.1 - 4.7(2) + 6.6(8) + 15.5(0)

y = 53.5

Hence, Estimate of sales = $53.5 in thousands

Ans c)

The number of competitors = 1. Hence x1 = 1

The population within one mile = 4,000. Hence x2 becomes 4 as its value is in thousands

There is a drive-up window. Hence x3 = 1

Putting these values in the equation,

y = 10.1 - 4.7(1) + 6.6(4) + 15.5(1)

y = 47.3

Hence, Estimate of sales = $47.3 in thousands

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