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YUSI AssignmentModule10

The document contains two examples of linear regression analysis: 1. It analyzes the relationship between collision claim ratings and comprehensive claim ratings for nine makes of cars. It finds a strong positive correlation (0.938) and that 88% of the variation in comprehensive ratings is explained by collision ratings. 2. It analyzes the relationship between distribution costs and number of orders for a catalog company. It calculates a regression equation and finds a high positive correlation (0.8622) between the variables, with 74.34% of variation in costs explained by number of orders.

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Reyne Yusi
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© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
51 views

YUSI AssignmentModule10

The document contains two examples of linear regression analysis: 1. It analyzes the relationship between collision claim ratings and comprehensive claim ratings for nine makes of cars. It finds a strong positive correlation (0.938) and that 88% of the variation in comprehensive ratings is explained by collision ratings. 2. It analyzes the relationship between distribution costs and number of orders for a catalog company. It calculates a regression equation and finds a high positive correlation (0.8622) between the variables, with 74.34% of variation in costs explained by number of orders.

Uploaded by

Reyne Yusi
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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YUSI, Reyne L.

A223
1. The Insurance Institute for Highway Safety has listed the following ratings based on
collision and comprehensive claims for nine makes of midsize four-door cars from
2014-2016 model years. Higher numbers reflect higher claims in the collision and
comprehensive categories of coverage.
2. Determine the slope value.
3. Determine the y-intercept value
4. Develop the linear regression equation or model
5. Predict the comprehensive claim rating for a collision rating of 130
6. Describe the coefficient of correlation
7. Describe the coefficient of determination

Collision claim Comprehensive


Claims X*Y X^2 Y^2
rating (X) claim rating (Y)
1 113 89 10,057 12,769 7,921
2 108 91 9,828 11,664 8,281
3 124 92 11,408 15,376 8,464
4 131 108 14,148 17,161 11,664
5 128 108 13,824 16,384 11,664
6 90 74 6,660 8,100 5,476
7 99 79 7,821 9,801 6,241
8 106 86 9,116 11,236 7,396
9 116 98 11,368 13,456 9,604
Total 1,015 825 94,230 115,947 76,711

𝑛∑𝑥𝑦−∑𝑥𝛴𝑦
2. 𝑏 = 𝑛∑𝑥 2 −(∑𝑥)2

9(94,230) − (1,015)(825)
𝑏=
9(115,947) − (1,015)2
𝑏 = 𝟎. 𝟖𝟎𝟒
𝛴𝑦−𝑏∑𝑥
3 .𝑎 = 𝑛

825 − 0.804(1,015)
𝑎=
9
𝑎 = 𝟎. 𝟗𝟔𝟒
4. Y = 0.964 + 0.804X
5. 𝑌 = 0.964 + 0.804(130)
𝑌 = 𝟏𝟎𝟓. 𝟓𝟐
𝑛(𝛴𝑥𝑦)−(∑𝑥)(𝛴𝑦)
6. 𝑟=
(√𝑛(𝛴𝑥 2 )−(𝛴𝑥)2 )(√𝑛(𝛴𝑦 2 )−(𝛴𝑦)2 )

9(94,230) − (1,015)(825)
𝑟=
(√9(115,947) − (1,015)2 ) (√9(76,711) − (825)2 )

𝑟 = 𝟎. 𝟗𝟑𝟖
The r-value of 0.9381 reflects the very high positive relationship of
the collision claim rating and comprehensive claim rating.

7. 𝒓𝟐 = 𝟖𝟖%
YUSI, Reyne L.
A223
Which means 88% of the changes in the collision claim rating can be
explained by its interaction with the comprehensive claim rating, and the remaining
12% are unexplained factors or factors not included in this study.

2. A mail-order catalog business that sells personal computer supplies, software,


and hardware maintains a centralized warehouse for the distribution of products
ordered. Management is currently examining the process distribution from the
warehouse and is interested in studying the factors that affect warehouse
distribution costs. Currently, a small handling fee is added to the order,
regardless of the amount. The table below shows the data (distribution costs in
thousands of dollars and number of orders) collected for the past 12 months.

1. Determine the slope value.


2. Determine the y-intercept value
3. Develop the linear regression equation or model
4. Predict the number of orders for a distribute costs of 90.25 (in thousand dollars)
5. Describe the coefficient of correlation
6. Describe the coefficient of determination

Distribution Number of
Month X*Y X^2 Y^2
costs (X) orders (Y)
1 53 4,015 212,594 2,804 16,120,225
2 72 3,806 272,738 5,135 14,485,636
3 86 5,309 454,344 7,324 28,185,481
4 64 4,262 271,447 4,056 18,164,644
5 73 4,296 312,792 5,301 18,455,616
6 68 4,097 280,399 4,684 16,785,409
7 52 3,213 168,554 2,752 10,323,369
8 71 4,809 340,333 5,008 23,126,481
9 82 5,237 429,591 6,729 27,426,169
10 74 4,732 352,013 5,534 22,391,824
11 71 4,413 312,617 5,018 19,474,569
12 54 2,921 157,968 2,925 8,532,241
Total 820 51,110 3,565,390 57,271 223,471,664

𝑛∑𝑥𝑦−∑𝑥𝛴𝑦
1. 𝑏 = 𝑛∑𝑥 2 −(∑𝑥)2

12(3,565,390) − (820)(51,110)
𝑏=
12(57,271) − (820)2
𝑏 = 𝟎. 𝟓𝟖
𝛴𝑦−𝑏∑𝑥
2. 𝑎 = 𝑛

51,110 − 58(820)
𝑎=
12
𝑎 = 𝟐𝟗𝟕. 𝟎𝟓
3. Y = 297.05 + 58X
4. 𝑌 = 297.05 + 58(90.25)
𝑌 = 𝟓, 𝟓𝟑𝟏. 𝟖𝟔
YUSI, Reyne L.
A223
𝑛(𝛴𝑥𝑦)−(∑𝑥)(𝛴𝑦)
5. 𝑟 =
(√𝑛(𝛴𝑥 2 )−(𝛴𝑥)2 )(√𝑛(𝛴𝑦 2 )−(𝛴𝑦)2 )

12(3,565,390) − (820)(51,110)
𝑟=
(√12(57,271) − (820)2 ) (√12(223,471,664) − (51,110)2 )

𝑟 = 𝟎. 𝟖𝟔𝟐𝟐 high positive correlation


The r-value of 0.8622 reflects the high positive relationship of the
distribution cost and number of orders.
6. 𝒓𝟐 = 𝟕𝟒. 𝟑𝟒%
Which means 74.34% of the changes in the distribution cost can be
explained by its interaction with the number of orders, and the remaining
25.66% are unexplained fators or factors not included in this study.

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