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# Data Analy For Managers DS 101

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This 5 page Study Guide was uploaded by Blair Erdman on Monday October 5, 2015. The Study Guide belongs to DS 101 at California State University - Sacramento taught by Staff in Fall. Since its upload, it has received 23 views. For similar materials see /class/218805/ds-101-california-state-university-sacramento in Decision Sciences at California State University - Sacramento.

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Date Created: 10/05/15

DS 101 Spring 2008 Regression Analysis and Model Building 2 February 19th 1 Regression Analysis Review We start out with the idea that there is a relationship between two variables in the form of a data set of paired X s and y s And we found we measure this relationship with the correlation coefficient and the coefficient of determination And we can see this relationship in a simple scatter diagram This is what we did in the first lab The method used was the least squares formula to develop the quantitative form of the model with a yintercept and a slope using the notation b0 and b1 respectively Selection of Organize X s Enter data into Run the simple X s and y s and y s into a Statgraphics 39 data set analysis Plot of Fitted Nbdel uelens 135a21 0743231 125 n n 115 g 105 g 95 u 85 75 Correlation Coef cient 3960088 R squaned 9217 percent 11 Model Building Exercise We need to remind ourselves before we get too far along what is the purpose of regression analysis The following are cases where you need to come up with the proposed linear regression model in the form ofy fX1 X2 Xn gt Y Bo 61 X1 B X2 Bn X1 Write out the initial model in the space after the case in the above format Think about why and how you would want to use regression analysis for each case 7 this gets to focus on what would be the response variable 1 You are a marketing manager for Home Depot For the market areas for the 56 Home Depot stores in your district you have the assessed valuation of the houses total store sales square footage of the houses age of the houses population figures and if area is considered urban or suburban 2 You are the director of the Career Center at a large university Your variables for a sample of recent graduates include overall GPA major area of study GPA starting salaries industry code where they accepted their job whether or not the graduate was a business major age years of work experience prior to graduation QMH4qKTGSEdoc Page 1 of5 D8 101 7 Spring 2003 Regression Analysis and Model Building 2 February 19quot You are a product designer with Black and Decker Tools Your sample variables for your study ofa new drillbit design include average drill speed used in the test hardness index ofthe material used to test the drill for a threeinch drill hole length of time for the drill bit to break whether or not water was used to cool the drill bit when being used You are a loan manager for a bank Your sample variables from the mortgages loans made in the last year are the selling price ofhouses square footage ofthe houses age ofthe houses number of room of the houses number of bathroom in the houses ifthe garages is detached not connected directly to the house and ifit is a comer lot or not u are a managing director of a large consulting firm You sample includes the following These are consultants With between ve and college business mathematics engineering liberal arts science whether they have a masters egree or not upperdivision college GPA if they have any prior work experience and if their major client base is private sector orpublic sector 111 Multiple Linear Regression Example We will expand our natural gas consumption to now include a chill factor Multiple Ragessinn e FuelCuns Dependent vsnshlc Futons lltvulable lnicpenie fl cnii lrreicm39 Menu Options Relate gt Multiple Factors gt Multiple Regression Dependent Vallahh rdelcons ndevendem Vallat env th crnwremnesrdon m or rdelcens r chm m We g comm mu m Analxhnlvu39hme a mu s i e eminence f5 8 Rimmed nt Redundudnsted faxdf 96 302i percent as m 79pm 2m Rzgnsn39zn Analys39s and MuddEuil ng 2 nth w w Hypmhesxs TemngmMuluple RegesaanAnalyas WthMme Thanone mam Variable Gas c mumpan r Aveng Tempexalug Chm ham Xamp mum mp placess 5 21 11 Thisislhz decin39mrulz szeclHn mfawx ufHa r and an yxfthe Wm fax myaf qe puma vanables 15 155 Lhanwlx mvaluem mu um um MEI um mhexwxsefadtaxejecHIa Step1 Shaun Fax Example we damtxqectHnmfnvmafHaaspwluaxsEl 456 whchxsguunhan US Nat Th2 hypmheastesusnmat mm sue af39he sluggbuzaustafthe an Duh Vanaan arm absewahans uwundthe regesaanhm v Assunpuans m me Regesam bmh mp1 and mu uple There are ax assunpuansfm 1mm xegesaan T111515 splat uf aux muxal gas cansu39npuan swam be mm 522 haw m mummg assumpnms apply m the standard made m xegesam analyas m mmw mmn m WWW 1mm 11 de 1 Lmzanty Thexegesaanfuncuanxslmeu QMHAqKTGSE dac Page 3 ufS DS 101 Spring 2008 Regression Analysis and Model Building 2 February 19th 2 Constant Variance Error terms e or s have a constant variance 3 Independence of Error Terms The error terms e or s are independent 4 There are no outliers 5 Normal Distribution of Error Terms The error terms are normally distributed for each set of values of Xiyi 6 Completeness One or more important signi cant predictors have not been omitted from the model These assumptions are important for residual analysis that is used to assess the validity of the regression model QMH4qKTGSEdoc Page 4 of5 DS 101 Spring 2008 Regression Analysis and Model Building 2 February 1911 V Review Exercises 1 Returns on common stocks in North American markets and overseas markets appear to be growing more closely correlated as economies become more interdependent Suppose this regression formula connects total annual returns in percent for North American markets and overseas markets Mean overseas return in terms 47 066 x Mean US return in terms a What do we mean by correlated and how do we see it in the above formula D0 are freehand sketch of the regression modelformula in the space provided below b What is the g in this line c What is the Bl in this line d What is the b0 in this line e What is the b1 in this line f If the Mean US return is 6 want is the mean overseas return g Give an interpretation of the 47 2 There is some evidence that drinking moderate amounts of red wine can prevent heart attacks The following table gives the related data for 1998 Do a freehand scatter plot of the data in the area provided below This time put in the data points 7 hint find the range for each variable Country Italy Spain Sweden Ireland Canada France Wine Consumption 79 65 16 07 24 91 Index Heart Disease Index 107 86 207 300 191 71 a What is the dependent variable b What is your initial regression model c Indicate 7 do not calculate one residual on the plot d The formula for the residual is 3 Why is the pvalue compared to the alpha or value 4 What is the expected value of the sum the errors 7 either ei or si in the regression formula or regression model hint 7 write out the regression model Why is this QMH4qKTGSEdoc Page 5 of5

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