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ASRM Regression Problems For Class Work

The document contains practice problems for linear regression analysis, covering various scenarios including sales and pricing, mutual fund losses, unemployment rates, and the impact of shelf space on pet food sales. Each problem requires the estimation of linear regression, interpretation of slopes, and hypothesis testing. The document provides data for analysis and encourages the application of statistical methods to derive insights.

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9 views4 pages

ASRM Regression Problems For Class Work

The document contains practice problems for linear regression analysis, covering various scenarios including sales and pricing, mutual fund losses, unemployment rates, and the impact of shelf space on pet food sales. Each problem requires the estimation of linear regression, interpretation of slopes, and hypothesis testing. The document provides data for analysis and encourages the application of statistical methods to derive insights.

Uploaded by

mandi
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 DOCX, PDF, TXT or read online on Scribd
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Goa Institute of Management

ASRM 2023-24.
Linear Regression Analysis Class Problems

Practice Problems for Part VI


1. A company sets different prices for a particular stereo system in eight
different regions of the country. The accompanying table shows the
numbers of units sold and the corresponding prices (in hundreds of Rs. s).
SALES 420 380 350 400 440 380 450 420
PRICE 5.5 6.0 6.5 6.0 5.0 6.5 4.5 5.0
(a) Plot these data, and estimate the linear regression of sales on price.
(b)What effect would you expect a Rs. 100 increase in price to have on
sales?

2. On Friday, November 13, 1989, prices on the BSE Exchange fell steeply;
the Standard and Poors 500-share index was down 6.1% on that day. The
accompanying table shows the percentage losses (y) of the twenty-five
largest mutual funds on November 13, 1989. Also shown are the
percentage gains (x), assuming reinvested dividends and capital gains, for
these same funds for 1989, through November 12.
y x y x y x
4.7 38.0 6.4 39.5 4.2 24.7
4.7 24.5 3.3 23.3 3.3 18.7
4.0 21.5 3.6 28.0 4.1 36.8
4.7 30.8 4.7 30.8 6.0 31.2
3.0 20.3 4.4 32.9 5.8 50.9
4.4 24.0 5.4 30.3 4.9 30.7
5.0 29.6 3.0 19.9 3.8 20.3
3.3 19.4 4.9 24.6
3.8 25.6 5.2 32.3
(a) Estimate the linear regression of November 13 losses on pre-November
13, 1989, gains.
(b)Interpret the slope of the sample regression line.
3. For a period of 11 years, the figures in the accompanying table
were found for annual change in unemployment rate and annual
change in mean employee absence rate due to own illness.
Change In Change In Mean Employee
Unemployment Absence Rate Due To Own
Year Rate Illness
1 -0.2 0.2
2 -0.1 0.2
3 1.4 0.2
4 1 -0.4
5 -0.3 -0.1
6 -0.7 0.2
7 0.7 -0.1
8 2.9 -0.8
9 -0.8 0.2
10 -0.7 0.2
11 -1 0.2
(a) Estimate the linear regression of change in mean employee absence
rate due to own illness on change in unemployment rate.
(b)Interpret the estimated slope of the regression line.

4. Refer to the data of Exercise 2. Test against a two-sided alternative the


null hypothesis that mutual fund losses on Friday, November 13, 1989, did
not depend linearly on previous gains in 1989.
5. An attempt was made to evaluate the forward rate as a predictor of the
spot rate in the Canadian treasury bill market. For a sample of seventy-
nine quarterly observations, the estimated linear regression:
y = .00027 + .7916x
was obtained, where
y = Actual change in the spot rate
x = Change in the forward rate
The coefficient of determination was 0.097, and the estimated standard
deviation of the estimator of the slope of the population regression line
was 0.2759.
(a) Interpret the slope of the estimated regression line.
(b)Interpret the coefficient of determination.
(c) Test the null hypothesis that the slope of the population regression line
is 0 against the alternative that the true slope is positive, and interpret
your result.
(d)Test against a two-sided alternative the null hypothesis that the slope
of the population regression line is 1, and interpret your result.

6. For a sample of 306 students in a basic business communications


course, the sample regression line
y = 58.813 + 0.2875x
was obtained, where
y = Final student score at the end of the course
x = Score on a diagnostic writing skills test given at the beginning of
the course
The coefficient of determination was 0.1158, and the estimated standard
deviation of the estimated slope of the population regression line was
0.04566.
(a) Interpret the slope of the sample regression line.
(b)Interpret the coefficient of determination.
(c) The information given allows the null hypothesis that the slope of the
population regression line is 0 to be tested against the alternative that
it is positive. Carry out this test and state your conclusion.
7. The marketing manager of a large supermarket chain would like to
determine the effect of shelf space on the sales of pet food. A random
sample of 12 equal-sized stores is selected with the following results:
WEEKLY SALES, Y WEEKLY SALES, Y
SHELF SPACE, (HUNDREDS OF SHELF SPACE, (HUNDREDS OF
STORE X (FEET) RS. S) STORE X (FEET) RS. S)
1 5 1.6 7 15 2.3
2 5 2.2 8 15 2.7
3 5 1.4 9 15 2.8
4 10 1.9 10 20 2.6
5 10 2.4 11 20 2.9
6 10 2.6 12 20 3.1
(a) Set up a scatter diagram.
(b) Assuming a linear relationship, use the least-squares method to find
^
β ^
β
the regression coefficients 0 and 1 .
^
β
(c) Interpret the meaning of the slope 1 in this problem.
(d) Predict the average weekly sales (in hundreds of Rs. s) of pet food
for stores with 8 feet of shelf space for pet food.
(e) Suppose that sales in store 12 are 2.6. Do parts (a)-(d) with this
value and compare the results,
(f) What shelf space would you recommend that the marketing
manager allocate to pet food? Explain.

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