Study questions SET I

BMPR I and BPLM I

Correlation & Regression

STQ 1:
The following is data relate to the number of bicycles and motorcycles owned in seven cities of
Tanzania.
Cities 1 2 3 4 5 6 7

Bicycles per 1000 population 245 236 238 232 250 247 252

Motorcycles per 10,000 population 23 35 18 36 41 43 48

Calculate the value of spearman’s rank correlation coefficient

STQ 2
The following data shows the average rent and rates (sh. per square foot) for a selection of areas.
Calculate Spearman’s rank correlation to assess whether there is any correlation between rates and
rents.

Rates (x) 168 146 157 1337 318 195 107 171 122 646

Rent (y) 381 419 487 2285 647 648 266 649 533 1523

STQ 3
The following data relate to the number of vehicles owned and road deaths for the populations of 12
countries.
Vehicles per 100
30 31 32 30 46 30 19 35 40 46 57 30
population
Road deaths per
100,000 30 14 30 23 32 26 20 21 23 30 35 26
population
REQUIRED:
Calculate Spearman’s rank correlation coefficient and comment on the result.

STQ 4
The following figures give (in units of sh.10m) the turnover and profit before taxation for a firm.
Turnover
106 125 147 167 187 220

Profit
10 12 16 17 18 22

REQUIRED
Calculate the coefficient of determination for this data and comment on the result.

STQ 5
A cost accountant has derived the total cost (sh.0000) against output (000) of standard size boxes
from a factory over a period of ten weeks, yielding the following data.
Output
20 2 4 23 18 14 10 8 13 8

Cost
60 25 26 66 49 48 35 18 40 33
REQUIRED
i). Calculate the product moment coefficient of correlation
ii). Interpret the result with a view to future extrapolation

STQ 6
The following data shows median regional incomes for men aged 21 years and over in full-time
employment and average regional house purchase prices for a particular year for twelve major regions
of the URT
Median income (sh)
57 54 54 51 63 56 52 56 55 55 56 50

House purchase price

10 9 19 12 15 15 12 11 10 10 11 10
(sh.000)

REQUIRED
Calculate:
a) The product moment correlation coefficient
b) Spearman’s rank correlation coefficient
c) Coefficient of determination

EXAM TYPE QUESTIONS

QUESTION 1
A national consumer protection society investigated seven brands of paint to determine their quality
relative to price. The society’s conclusions were ranked according to the following table:
Brand
T U V W X Y Z

Price/liter
192 158 135 160 205 139 177

Quality ranking
2 6 7 4 3 5 1

REQUIRED
Using Spearman’s rank correlation coefficient, determine whether the consumer generally gets value
for money.

QUESTION 2
Marks and Spencer plc

Year 1977 1978 1979 1980 1981 1982

Turnover (sh.10m) 106 125 147 167 187 220

Profit before taxation
(sh.10m) 10 12 16 17 18 22

REQUIRED
i). Plot a scatter diagram showing the relationship between profit before taxation and turnover
ii). Calculate the least square regression line before taxation on turnover
iii). Calculate coefficient correlation and determination coefficient
iv). Comment generally on your results

QUESTION 3
A company keeps extension records on its sales people on the premise that sales should increase with
experience. A random sample of eight new sales people produced data on experience and sales
provided in the following table below:
Months on the job
2 4 8 12 1 5 9 7

Monthly sales (sh.000)

2.4 7.0 11.3 15.0 0.8 3.7 12.0 5.2

REQUIRED
i). Use the regression line to estimate quantitatively the relationship between the number of
months on the job and the level of monthly sales.
ii). Compute and interpret both the coefficient of correlation and that of determination
iii). Estimate the level of sales in sh. if the experience of the sales people is exactly 10 months.

QUESTION 4
The following data gives the actual sales (in millions of shillings) of a company in each of 8 regions of a
country together with the forecast of sales by two different methods

Region Actual Forecast Forecast

sales 1 2
A 15 13 16
B 19 25 19
C 30 23 26
D 12 26 14
E 58 48 65
F 10 15 19
G 23 28 27
H 17 10 22
REQUIRED
a) Calculate the rank correlation coefficient between:
i). Actual sales and forecast 1
ii). Actual sales and forecast 2
b) Which forecasting method would you recommend next year?

QUESTION 5

a) A panel of men and a panel of women were asked by a consumer testing organization to rank
8 brands of tea according to taste. A rank of 1 was given to the best tasting tea and a rank of 8
to the worst.

Brand A B C D E F G H

Panel of Women (X) 5 4 3 6 7 8 1 2

Panel of Men (Y) 4 5 6 3 8 7 2 1

Determine how closely men’s and women’s tastes in tea are related.

b) After investigation it has been found that the demand for automobiles in a town depends
mainly, if not entirely, upon the number of families residing in that town. Below are given
 figures for the sales of automobiles in the five cities for the year 1986, and the number of
families residing in those cities

City No. of families in 10,000’s Sale of Automobiles in 1,000’s

(X) (Y)

A 70 25.2

B 75 28.6

C 80 30.2

D 60 22.3

E 90 35.4

REQUIRED
Fit a linear equation of Y on X by the least square method and estimate the sales for the year 1988 for
city A which is estimated to have 300,000 families assuming that the same relationship holds true.

QUESTION 6:
The following data give the experience of machine operators and their performance ratings as given by
the number of good parts turned out per 100 pieces.

Operator 1 2 3 4 5 6 7 8

Experience (X) 1 1 1 4 3 1 5 1
6 2 8 0 2

Performance Ratings 8 8 8 6 7 8 7 8
(Y) 7 8 9 8 8 0 5 3

REQUIRED
(a) Calculate the regression lines of performance ratings on experience.

(b) Estimate the probable performance if an operator has 8 years’ experience

QUESTION 7:

Coca-Cola Company provides you with the following table showing the number of units of goods
produced and total cost incurred for the period of ten years as follows:

Year Units ('000') Total costs

(sh.'000,000')
2003 10 40
2004 15 45
2005 30 50
2006 40 65
2007 55 70
2008 60 70
2009 70 80
2010 90 85
 2011 95 90
2012 100 98

REQUIRED
i) Determine the linear regression equation
ii) Coca-Cola Company plans to produce 120,000 units in year 2013, estimate the expected total
cost of production.
iii) Estimate the Pearson's correlation coefficient of the variables and interpret on your answer.

iv) Estimate the coefficient of determination and interpret on your answer

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