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Assignment 6 Regression Solution PDF

The document discusses four regression problems involving predicting final exam scores, bass drum sales, travel expenses, and starting salary. It provides the regression models, coefficients, and predictions for each problem and analyzes the effectiveness of the models.

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162 views

Assignment 6 Regression Solution PDF

The document discusses four regression problems involving predicting final exam scores, bass drum sales, travel expenses, and starting salary. It provides the regression models, coefficients, and predictions for each problem and analyzes the effectiveness of the models.

Uploaded by

lyriemaecutara0
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Assignment 6: Regression

Due: May 4 (Friday), 3:00pm

Problem 1 (Exams)
Students in a management science class have just received their grades on the midterm test. The
instructor has provided information about the midterm grades in some previous classes as well
as the final average for the same students. Some of these grades have been sampled and are as
follows:
Student 1 2 3 4 5 6 7 8 9
Midterm 98 77 88 78 96 61 66 95 69
Final average 93 78 84 72 84 64 64 95 76

(a) Develop a linear regression model that could be used to predict the final average in the
course based on the midterm grade.
(b) Predict the final average of a student who made an 83 on the midterm.
(c) Give the values of r and r2 for this model. Interpret the value of r2 in the context of this
problem.

Solution
(a)
ANOVA
df SS MS F ignificance F
Regression 1 863.3629 863.3629 40.96594 0.000367
Residual 7 147.526 21.07514
Total 8 1010.889

Coefficientsandard Erro t Stat P-value Lower 95%Upper 95%


Intercept 18.57527 9.54676 1.945715 0.092751 -3.99923 41.14977
First test g 0.745635 0.116497 6.400464 0.000367 0.470164 1.021107

Estimated Final Average = 18.575 + 0.7456*Midterm Grade


(b) Predicted Final Average = 18.575 + 0.7456*83 = 80.46
(c) r2 = SSR/SST = 863.36/1010.89 = 0.854 and r = 0.854^0.5 = 0.924. r2 means the proportion of the
variation in final average that can be explained by the midterm.
Problem 2 (Bass Drums)
The operations manager of a musical instrument distributor feels that demand for bass drums
may be related to the number of television appearances by the popular rock group Green
Shades during the preceding month. The manager has collected the data shown in the following
table:
Demand for Bass Drums Green Shades TV Appearance
3 3
6 4
7 7
5 4
10 9
8 5
6 5

(a) Graph these data to see whether a linear equation might describe the relationship between
the group’s television shows and bass drum sales.
(b) Using the equations presented in this chapter, compute the SST, SSE, and SSR. Find the
regression equation for these data.
(c) Based on the available information, what is your estimate for bass drum sales if the Green
Shades performed on TV six times last month?
Solution:
(a)

Demand for Bass Drums


12

10

0
0 2 4 6 8 10
Green Shades TV Appearance

(b)
ANOVA
df SS MS F ignificance F
Regression 1 22.92215 22.92215 16.87404 0.009284
Residual 5 6.792135 1.358427
Total 6 29.71429

Coefficientsandard Erro t Stat P-value Lower 95%Upper 95%


Intercept 1.410112 1.298686 1.085799 0.327121 -1.92827 4.748492
Green Sha 0.949438 0.23113 4.107802 0.009284 0.355298 1.543578

(c) Estimated sales = 1.41 + 0.9494*6 = 7.1


Problem 3 (Suspicious Reimbursement Requests)
Accountant at the firm Walker and Walker believed that several traveling executives submit
unusually high travel vouchers when they return from business trips. The accountant took a
sample of 200 vouchers submitted from the past year; they then developed the following
multiple regression equation relating expected travel cost (Y) to number of days on the road (X1)
and distance traveled (X2) in miles:
𝑌𝑌� = $90.00 + $48.50𝑋𝑋1 + $0.40𝑋𝑋2
The coefficient of correlation computed was 0.68.
(a) If Thomas Williams returns from a 300-mile trip that took him out of town for 5 days, what is
the expected amount that he should claim as expenses?
(b) Williams submitted a reimbursement request for $685; what should the accountant do?
(c) Comment on the validity of this model. What is the adjusted r squared? How much variability
in the travel cost is captured by the current model? Should any other variables be included?
Which ones? Why?

Solution
(a) Number of days on the road: X1 = 5; Distance traveled: X2 = 300 miles
The amount he may be expected to claim is
𝑌𝑌� = 90.00 + 48.50(5) + $0.40(300) = $452.50

(b) The reimbursement request, according to the model, appears to be too high. However, this
does not mean that it is not justified. The accountant should question Thomas Williams
about his expenses to see if there are other explanations for the high cost.
(c) A number of other variables should be included, such as the type of travel (air or car),
conference fees if any, and expenses for entertainment of customers, and other
transportation (cab and limousine) expenses. In addition, the coefficient of correlation is
only 0.68 and r2 = (0.68)2 = 0.46. Thus, about 46% of the variability in the cost of the trip is
explained by this model; the other 54% is due to other factors.
Problem 4 (Salary)
The following data give the starting salary for students who recently graduated from a local
university and accepted jobs soon after graduation. The starting salary, grade-point average
(GPA), and major (business or other) are provided.
Salary 29500 38000 44800 36500 42000 31500 36200 30000
GPA 3.1 3.5 3.8 2.9 3.4 2.1 2.5 3.6
Major Other Busines Busines Other Busines Other Busines Other
s s s s
(a) Develop a linear model that could be used to predict starting salary based on GPA and major.
Comment on the effectiveness of the model.
(b) What does the model say about the starting salary for a business major compared to a
nonbusiness major --- specifically, does the business major have a significant impact on the
starting salary?

Solution
(a) The estimated prediction equation is
� = 26667 + 1780.5 × 𝐺𝐺𝐺𝐺𝐺𝐺 + 7707.3 × 𝑍𝑍,
𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆
where Z = 1 if major is business and 0 if otherwise. The adjusted r squared is 0.55 and the p-
value for the F test is 0.058, which means that the model is not significant at 5% level. Hence,
the model is not very useful for predicting the starting salary.
(b) The t test for Z is significant at 5% level and the p-value is 0.04. Thus, business major does
have a significantly different starting salary in comparison to other majors.

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