Statistics for Managers

Using Microsoft Excel

5th Edition
Chapter 13
Simple Linear Regression

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-1

Learning Objectives
In this chapter, you learn:
To use regression analysis to predict the value of a
dependent variable based on an independent variable
The meaning of the regression coefficients b0 and b1
To evaluate the assumptions of regression analysis and

know what to do if the assumptions are violated

To make inferences about the slope and correlation
coefficient
To estimate mean values and predict individual values

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-2

Correlation vs. Regression

A scatter plot (or scatter diagram) can be used

to show the relationship between two

numerical variables
Correlation analysis is used to measure
strength of the association (linear
relationship) between two variables

Correlation is only concerned with strength of

the relationship
No causal effect is implied with correlation
Correlation was first presented in Chapter 3
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-3

Regression Analysis
Regression analysis is used to:
Predict the value of a dependent variable based

on the value of at least one independent variable

Explain the impact of changes in an independent

variable on the dependent variable

Dependent variable: the variable you wish to explain

Independent variable: the variable used to explain
the dependent variable

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-4

Simple Linear Regression

Model
Only one independent variable, X
Relationship between X and Y is described

by a linear function
Changes in Y are related to changes in X

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-5

Types of Relationships
Linear relationships

Curvilinear relationships

X
Y

X
Y

X
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X
Chap 13-6

Types of Relationships
Strong relationships
Y

Weak relationships
Y

X
Y

X
Y

X
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X
Chap 13-7

Types of Relationships
Y

No relationship
Y

X
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Chap 13-8

The Linear Regression Model

Population
Y intercept
Dependent
Variable

Population
Slope
Coefficient

Independent
Variable

Random
Error
term

Yi 0 1X i i
Linear component

Random Error
component

The population regression model:

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-9

The Linear Regression Model

Y

Yi 0 1X i i

Observed Value
of Y for Xi

i
Predicted Value
of Y for Xi

Slope = 1
Random Error
for this Xi value

Intercept = 0

Xi
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

X
Chap 13-10

Linear Regression Equation

The simple linear regression equation provides an
estimate of the population regression line
Estimated (or
predicted) Y
value for
observation i

Estimate of the
regression
intercept

Estimate of the
regression slope

Yi b 0 b1X i
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Value of X for
observation i

Chap 13-11

The Least Squares Method

b0 and b1 are obtained by finding the values of b0

and b1 that minimize the sum of the squared

differences between Y and Y :
2
2

min (Yi Yi ) min (Yi (b 0 b1X i ))

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-12

Finding the Least Squares

Equation
The coefficients b0 and b1 , and other regression

results in this chapter, will be found using Excel

Formulas are shown in the text for
those who are interested

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-13

Interpretation of the
Intercept and the Slope
b0 is the estimated mean value of Y when the

value of X is zero
b1 is the estimated change in the mean value of

Y for every one-unit change in X

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-14

Linear Regression Example

A real estate agent wishes to examine the

relationship between the selling price of a

home and its size (measured in square feet)
A random sample of 10 houses is selected
Dependent variable (Y) = house price in

$1000s
Independent variable (X) = square feet

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-15

Linear Regression Example

Data
House Price in $1000s
(Y)

Square Feet
(X)

245

1400

312

1600

279

1700

308

1875

199

1100

219

1550

405

2350

324

2450

319

1425

255

1700

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Chap 13-16

Linear Regression Example

Scatterplot
House price model: scatter plot

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Chap 13-17

Linear Regression Example

Using Excel
Tools
-------Data Analysis
-------Regression

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-18

Linear Regression Example

Excel Output
Regression Statistics
Multiple R

0.76211

R Square

0.58082

Adjusted R Square

0.52842

Standard Error

The regression equation is:

house price 98.24833 0.10977 (square feet)

41.33032

Observations

10

ANOVA

df

SS

MS

Regression

18934.9348

18934.9348

Residual

13665.5652

1708.1957

Total

32600.5000

Intercept
Square Feet

Coefficients

Standard Error

t Stat

F
11.0848

P-value

Significance F
0.01039

Lower 95%

Upper 95%

98.24833

58.03348

1.69296

0.12892

-35.57720

232.07386

0.10977

0.03297

3.32938

0.01039

0.03374

0.18580

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-19

Linear Regression Example

Graphical Representation
House price model: scatter plot and regression line

Slope
= 0.10977

Intercept
= 98.248

house price 98.24833 0.10977 (square feet)

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-20

Linear Regression Example

Interpretation of b0
house price 98.24833 0.10977 (square feet)
b0 is the estimated mean value of Y when the value

of X is zero (if X = 0 is in the range of observed X

values)
Because the square footage of the house cannot be 0,
the Y intercept has no practical application.

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-21

Linear Regression Example

Interpretation of b1
house price 98.24833 0.10977 (square feet)
b1 measures the mean change in the average value of

Y as a result of a one-unit change in X

Here, b1 = .10977 tells us that the mean value of a
house increases by .10977($1000) = $109.77, on
average, for each additional one square foot of size

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-22

Linear Regression Example

Making Predictions
Predict the price for a house with 2000 square feet:

house price 98.25 0.1098 (sq.ft.)

98.25 0.1098(200 0)
317.85
The predicted price for a house with 2000 square feet
is 317.85($1,000s) = $317,850
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Chap 13-23

Linear Regression Example

Making Predictions
When using a regression model for prediction, only

predict within the relevant range of data

Relevant range for
interpolation

Do not try to
extrapolate beyond
the range of
observed Xs

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Chap 13-24

Measures of Variation
Total variation is made up of two parts:

SST
Total Sum of
Squares

SST ( Yi Y )2

SSR
Regression Sum of
Squares

SSE
Error Sum of
Squares

)2
SSR ( Yi Y )2 SSE ( Yi Y
i

where:

Y = Mean value of the dependent variable

Yi = Observed values of the dependent variable

Y
i = Predicted value of Y for the given X i value
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Chap 13-25

Measures of Variation
SST = total sum of squares
Measures the variation of the Yi values around

their mean Y
SSR = regression sum of squares
Explained variation attributable to the

relationship between X and Y

SSE = error sum of squares
Variation attributable to factors other than the

relationship between X and Y

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-26

Measures of Variation
Y
Yi

SSE = (Yi - Yi )2

SST = (Yi - Y)2

_
SSR = (Yi - Y)2

Xi
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_
Y

X
Chap 13-27

Coefficient of Determination, r2
The coefficient of determination is the portion of

the total variation in the dependent variable that

is explained by variation in the independent
variable
The coefficient of determination is also called rsquared and is denoted as r2
SSR regression sum of squares
r

SST
total sum of squares
2

0 r 1
2

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-28

Coefficient of Determination, r2
Y
r2 = 1

r2 = -1

100% of the variation in Y is

explained by variation in X

r =1
2

Perfect linear relationship

between X and Y:

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Chap 13-29

Coefficient of Determination, r2
Y
0 < r2 < 1

Weaker linear relationships

between X and Y:
Some but not all of the variation
in Y is explained by variation in
X

X
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Chap 13-30

Coefficient of Determination, r2
r2 = 0

No linear relationship between X

and Y:

r2 = 0

The value of Y is not related to X.

(None of the variation in Y is
explained by variation in X)

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-31

Linear Regression Example

Coefficient of Determination, r2
SSR 18934.9348
r

0.58082
SST 32600.5000

Regression Statistics
Multiple R

0.76211

R Square

0.58082

Adjusted R Square

0.52842

Standard Error

58.08% of the variation in house

prices is explained by variation in
square feet

41.33032

Observations

10

ANOVA

df

SS

MS

Regression

18934.9348

18934.9348

Residual

13665.5652

1708.1957

Total

32600.5000

Intercept
Square Feet

Coefficients

Standard Error

t Stat

F
11.0848

P-value

Significance F
0.01039

Lower 95%

Upper 95%

98.24833

58.03348

1.69296

0.12892

-35.57720

232.07386

0.10977

0.03297

3.32938

0.01039

0.03374

0.18580

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-32

Standard Error of Estimate

The standard deviation of the variation of observations

around the regression line is estimated by

n

SYX

SSE

n2

(
Y

Y
)
i i
i 1

n2

Where
SSE = error sum of squares
n = sample size
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-33

Linear Regression Example

Standard Error of Estimate
Regression Statistics
Multiple R

0.76211

R Square

0.58082

Adjusted R Square

0.52842

Standard Error

S YX 41.33032

41.33032

Observations

10

ANOVA

df

SS

MS

Regression

18934.9348

18934.9348

Residual

13665.5652

1708.1957

Total

32600.5000

Intercept
Square Feet

Coefficients

Standard Error

t Stat

F
11.0848

P-value

Significance F
0.01039

Lower 95%

Upper 95%

98.24833

58.03348

1.69296

0.12892

-35.57720

232.07386

0.10977

0.03297

3.32938

0.01039

0.03374

0.18580

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-34

Comparing Standard Errors

SYX is a measure of the variation of observed
Y values from the regression line
Y
Y

small s YX

large s YX

The magnitude of SYX should always be judged relative to

the size of the Y values in the sample data
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Chap 13-35

Assumptions of Regression
L.I.N.E
Linearity
The relationship between X and Y is linear
Independence of Errors
Error values are statistically independent
Normality of Error
Error values are normally distributed for any given value

of X
Equal Variance (also called homoscedasticity)
The probability distribution of the errors has constant
variance
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Chap 13-36

Residual Analysis
ei Yi Yi
The residual for observation i, ei, is the difference between its

observed and predicted value

Check the assumptions of regression by examining the residuals
Examine for Linearity assumption
Evaluate Independence assumption
Evaluate Normal distribution assumption
Examine Equal variance for all levels of X
Graphical Analysis of Residuals
Can plot residuals vs. X
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Chap 13-37

Residual Analysis for Linearity

Y

residuals

residuals

Not Linear
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x
Linear
Chap 13-38

Residual Analysis for

Independence

residuals

residuals

Independent

residuals

Not Independent

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Chap 13-39

Checking for Normality

Examine the Stem-and-Leaf Display of the

Residuals
Examine the Box-and-Whisker Plot of the
Residuals
Examine the Histogram of the Residuals
Construct a Normal Probability Plot of the
Residuals

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Chap 13-40

Residual Analysis for

Equal Variance
Y

residuals

residuals

Unequal variance
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x
Equal variance
Chap 13-41

Linear Regression Example

Excel Residual Output
RESIDUAL OUTPUT
Predicted
House Price

Residuals

251.92316

-6.923162

273.87671

38.12329

284.85348

-5.853484

304.06284

3.937162

218.99284

-19.99284

268.38832

-49.38832

356.20251

48.79749

367.17929

-43.17929

254.6674

64.33264

10

284.85348

-29.85348

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Does not appear to violate

any regression assumptions
Chap 13-42

Measuring Autocorrelation:
The Durbin-Watson Statistic
Used when data are collected over time to

detect if autocorrelation is present

Autocorrelation exists if residuals in one

time period are related to residuals in another

period

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Chap 13-43

Autocorrelation
Autocorrelation is correlation of the errors

(residuals) over time

Here, residuals suggest a

cyclic pattern, not
random

Violates the regression assumption that residuals are

statistically independent
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Chap 13-44

The Durbin-Watson Statistic

The Durbin-Watson statistic is used to test for autocorrelation

H0: residuals are not correlated

H1: autocorrelation is present
n

(e e
i2

2
e
i
i 1

i 1

The possible range is 0 D 4

D should be close to 2 if H0 is true
D less than 2 may signal positive
autocorrelation, D greater than 2 may
signal negative autocorrelation

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Chap 13-45

The Durbin-Watson Statistic

H0: positive autocorrelation does not exist
H1: positive autocorrelation is present
Calculate the Durbin-Watson test statistic = D
(The Durbin-Watson Statistic can be found using Excel)

Find the values dL and dU from the Durbin-Watson table

(for sample size n and number of independent variables k)

Decision rule: reject H0 if D < dL

Reject H0

Inconclusive

dL

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Do not reject H0

dU

2
Chap 13-46

The Durbin-Watson Statistic

Example with n = 25:
Excel output:
Durbin-Watson Calculations
Sum of Squared
Difference of Residuals

3296.18

Sum of Squared Residuals

3279.98

Durbin-Watson Statistic

1.00494

(e
i 2

ei1 )2

ei

3296.18
1.00494
3279.98

i1

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Chap 13-47

The Durbin-Watson Statistic

Here, n = 25 and there is k = 1 independent variable
Using the Durbin-Watson table, dL = 1.29 and dU = 1.45
D = 1.00494 < dL = 1.29, so reject H0 and conclude that

significant positive autocorrelation exists

Therefore the linear model is not the appropriate model to
predict sales
Decision: reject H0 since
D = 1.00494 < dL
Reject H0

Inconclusive

dL=1.29

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Do not reject H0

dU=1.45

2
Chap 13-48

Inferences About the Slope:

t Test
t test for a population slope
Is there a linear relationship between X and Y?

Null and alternative hypotheses

H 0 : 1 = 0
H 1 : 1 0

Test statistic

(no linear relationship)

(linear relationship does exist)

b1 1
t
Sb1

where:

d.f. n 2

Sb1 = standard
error of the slope

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

b1 = regression slope
coefficient
1 = hypothesized slope

Chap 13-49

Inferences About the Slope:

t Test Example
House Price in
$1000s
(y)

Square Feet
(x)

245

1400

312

1600

279

1700

308

1875

199

1100

219

1550

405

2350

324

2450

319

1425

255

1700

Estimated Regression Equation:

house price 98.25 0.1098 (sq.ft.)

The slope of this model is 0.1098

Is there a relationship between the
square footage of the house and its
sales price?

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-50

Inferences About the Slope:

t Test Example
H0: 1 = 0
H1: 1 0

From Excel output:

Intercept
Square Feet

Coefficients

b1
Standard Error

Sb1
t Stat

P-value

98.24833

58.03348

1.69296

0.12892

0.10977

0.03297

3.32938

0.01039

b1 1 0.10977 0
t

3.32938
t
Sb1
0.03297

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-51

Inferences About the Slope:

t Test Example
Test Statistic: t = 3.329

H0: 1 = 0
H1: 1 0

d.f. = 10- 2 = 8
/2=.025

Reject H0

/2=.025

Do not reject H0

-t/2
-2.3060

Reject H

0
t/2
2.3060 3.329

Decision: Reject H0
There is sufficient evidence
that square footage affects
house price

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-52

Inferences About the Slope:

t Test Example
P-Value

From Excel output:

Intercept

H0: 1 = 0
H1: 1 0

Square Feet

Coefficients

Standard Error

t Stat

P-value

98.24833

58.03348

1.69296

0.12892

0.10977

0.03297

3.32938

0.01039

Decision: Reject H0, since p-value <

There is sufficient evidence that
square footage affects house price.

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-53

F-Test for Significance

F Test statistic:

where

MSR
F
MSE
SSR
MSR
k
SSE
MSE
n k 1

where F follows an F distribution with k numerator degrees of freedom

and (n - k - 1) denominator degrees of freedom
(k = the number of independent variables in the regression model)
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Chap 13-54

F-Test for Significance

Excel Output
Regression Statistics
Multiple R

0.76211

R Square

0.58082

Adjusted R Square

0.52842

Standard Error

MSR 18934.9348
F

11.0848
MSE 1708.1957

41.33032

Observations

10

With 1 and 8 degrees

of freedom

P-value for
the F-Test

ANOVA

df

SS

MS

Regression

18934.9348

18934.9348

Residual

13665.5652

1708.1957

Total

32600.5000

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

F
11.0848

Significance F
0.01039

Chap 13-55

F-Test for Significance

Test Statistic:

H 0 : 1 = 0

MSR
F
11.08
MSE

H 1 : 1 0
= .05
df1= 1

Do not
reject H0

df2 = 8

Critical Value:

Decision:
Reject H0 at = 0.05

F = 5.32
= .05

Conclusion:

Reject H0

There is sufficient evidence that

house size affects selling price

F.05 = 5.32

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-56

Confidence Interval Estimate

for the Slope
Confidence Interval Estimate of the Slope:

b1 t n2Sb1

d.f. = n - 2

Excel Printout for House Prices:

Intercept
Square Feet

Coefficients

Standard Error

t Stat

P-value

Lower 95%

Upper 95%

98.24833

58.03348

1.69296

0.12892

-35.57720

232.07386

0.10977

0.03297

3.32938

0.01039

0.03374

0.18580

At the 95% level of confidence, the confidence

interval for the slope is (0.0337, 0.1858)
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-57

Confidence Interval Estimate

for the Slope
Coefficients

Intercept
Square Feet

Standard Error

t Stat

P-value

Lower 95%

Upper 95%

98.24833

58.03348

1.69296

0.12892

-35.57720

232.07386

0.10977

0.03297

3.32938

0.01039

0.03374

0.18580

Since the units of the house price variable is $1000s, you

are 95% confident that the mean change in sales price is
between $33.74 and $185.80 per square foot of house size
This 95% confidence interval does not include 0.
Conclusion: There is a significant relationship between house price and
square feet at the .05 level of significance
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-58

t Test for a Correlation Coefficient

Hypotheses

H0: = 0

(no correlation between X and Y)

H1: 0

(correlation exists)

Test statistic

r -

(with n 2 degrees of freedom)

1 r
n2
2

where
r r 2 if b1 0
r r 2 if b1 0

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-59

t Test for a Correlation Coefficient

Is there evidence of a linear relationship
between square feet and house price at the .05
level of significance?
H 0: = 0

(No correlation)

H 1: 0

(correlation exists)

=.05 , df = 10 - 2 = 8

r
1 r2
n2

.762 0
1 .762 2
10 2

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

3.329

Chap 13-60

t Test for a Correlation Coefficient

Decision:
Reject H0

d.f. = 10- 2 = 8
/2=.025

Reject H0

/2=.025

-t/2

-2.3060

Do not reject H0

Reject H0

t/2
2.3060

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

3.329

Conclusion:
There is evidence
of a linear
association at the
5% level of
significance

Chap 13-61

Estimating Mean Values and

Predicting Individual Values
Confidence
Interval for
the mean of
Y, given Xi

Goal: Form intervals around Y to express

uncertainty about the value of Y for a given Xi

Y = b0+b1Xi

Prediction Interval for an

individual Y, given Xi
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Xi

X
Chap 13-62

Confidence Interval for

the Average Y, Given X
Confidence interval estimate for the mean value of
Y given a particular Xi

Confidence interval for Y|X Xi :

Y t n2S YX hi
Size of interval varies according to
distance away from mean, X

1 (X i X) 2 1
(X i X) 2
hi

n
SSX
n (X i X) 2
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-63

Prediction Interval for

an Individual Y, Given X
Prediction interval estimate for an individual value
of Y given a particular Xi

Prediction interval for YX X i :

Y t n 2SYX 1 hi

This extra term adds to the interval width to reflect the

added uncertainty for an individual case
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-64

Estimation of Mean Values:

Example
Confidence Interval Estimate for Y|X=X

Find the 95% confidence interval for the mean price of 2,000
square-foot houses

Predicted Price Yi = 317.85 ($1,000s)

Y t n-2S YX

1
(Xi X)2

317.85 37.12
2
n (Xi X)

The confidence interval endpoints are 280.66 and 354.90,

or from $280,660 to $354,900
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-65

Estimation of Individual
Values: Example
Prediction Interval Estimate for YX=X

Find the 95% prediction interval for an individual house with

2,000 square feet

Predicted Price Yi = 317.85 ($1,000s)

Y t n-1S YX

1
(Xi X)2
1
317.85 102.28
2
n (Xi X)

The prediction interval endpoints are 215.50 and 420.07, or

from $215,500 to $420,070
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-66

Pitfalls of Regression Analysis

Lacking an awareness of the assumptions

underlying least-squares regression

Not knowing how to evaluate the assumptions
Not knowing the alternatives to least-squares
regression if a particular assumption is violated
Using a regression model without knowledge of
the subject matter
Extrapolating outside the relevant range

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-67

Strategies for Avoiding

the Pitfalls of Regression
Start with a scatter plot of X on Y to observe

possible relationship
Perform residual analysis to check the
assumptions
Plot the residuals vs. X to check for violations

of assumptions such as equal variance

Use a histogram, stem-and-leaf display, boxand-whisker plot, or normal probability plot of
the residuals to uncover possible non-normality
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-68

Strategies for Avoiding

the Pitfalls of Regression
If there is violation of any assumption, use

alternative methods or models

If there is no evidence of assumption
violation, then test for the significance of the
regression coefficients and construct
confidence intervals and prediction intervals
Avoid making predictions or forecasts
outside the relevant range

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-69

Chapter Summary
In this chapter, we have
Introduced types of regression models
Reviewed assumptions of regression and

correlation
Discussed determining the simple linear
regression equation
Described measures of variation
Discussed residual analysis
Addressed measuring autocorrelation

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-70

Chapter Summary
In this chapter, we have
Described inference about the slope
Discussed correlation -- measuring the

strength of the association

Addressed estimation of mean values and
prediction of individual values
Discussed possible pitfalls in regression and
recommended strategies to avoid them
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 13-71