Regression Class Example

Mark Price, the new productions manager for Speakers and Company, needs to find out which variable
He is uncertain whether the unit price of the product or the effects of increased marketing are the ma
more demand for its particular market. Pertinent information was collected over the last 10 years:
Year

1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009

Sales
(Y)
400
700
900
1300
1150
1200
900
1100
980
1234
925
800

Price
(X1)
280
215
211
210
215
200
225
207
220
211
227
245

Advertising (in
$000) (X2)
600
835
1100
1400
1200
1300
900
1100
700
900
700
690

a)If only the effect of product price on sales is analyzed, what is the corresponding
b)If only the effect of advertisement on sales is analyzed, what is the corresponding
c)If both the effect of product price and advertisement are to be considered in the
d)Predict average yearly sales if the price was $300 per unit and the amount spent

eds to find out which variable most affects the demand for their line of stereo speakers.
eased marketing are the main drivers in sales and wants to use regression analysis to figure out which factor dr
d over the last 10 years:

Chart Title

f(x)
+ 813.1818181818
f(x) =
= 23.472027972x
- 20.3671328671x
+ 1084.4696969697

Column C

Linear (Column C)

Column E

Linear (Column E)

Column

d, what is the corresponding regression line?

ed, what is the corresponding regression line?
are to be considered in the analysis, what is the corresponding regression line? Is the fit better with more varia
r unit and the amount spent on advertising (in $000) was $900.

ure out which factor drives

mn C)

Column D

mn E)

better with more variables included?

SUMMARY OUTPUT
Regression Statistics
Multiple R
0.8218665404
R Square
0.6754646103
Adjusted R Square
0.6430110713
Standard Error
152.77671012
Observations
12
ANOVA
df
Regression
Residual
Total

SS
MS
F
1 485797.0184601 485797.01846 20.813280516
10 233407.2315399 23340.723154
11
719204.25

Intercept
Price (X1)

Coefficients
Standard Error
t Stat
P-value
3129.0457029 476.2291505185 6.5704623489 6.30811E-005
-9.7372649795
2.1343553144 -4.562157441 0.0010386959

Significance F
0.0010386959

Lower 95%
Upper 95%
Lower 95.0%
Upper 95.0%
2067.94103023 4190.1503757 2067.9410302 4190.1503757
-14.4929049796 -4.9816249795 -14.49290498 -4.9816249795

SUMMARY OUTPUT
Regression Statistics
Multiple R
0.7504227091
R Square
0.5631342424
Adjusted R Square
0.5194476666
Standard Error
177.25566551
Observations
12
ANOVA
df
Regression
Residual
Total

Intercept
Advertising (in $000) (X2)

SS
MS
1 405008.5404418 405008.54044
10 314195.7095582 31419.570956
11
719204.25

Coefficients
Standard Error
t Stat
273.35001129 199.5253176778 1.3700016342
0.7272472529
0.2025583375 3.5903101388

F
Significance F
12.890326892 0.0049265592

P-value
Lower 95%
Upper 95%
Lower 95.0% Upper 95.0%
0.2006583964 -171.220100982 717.92012356 -171.22010098 717.92012356
0.0049265592 0.2759191513 1.1785753545 0.2759191513 1.1785753545

SUMMARY OUTPUT
Regression Statistics
Multiple R
0.8549691393
R Square
0.7309722292
Adjusted R Square
0.6711882802
Standard Error
146.62344671
Observations
12
ANOVA
df
Regression
Residual
Total

Intercept
Price (X1)
Advertising (in $000) (X2)

2
9
11

SS
MS
525718.333887 262859.16694
193485.916113 21498.435124
719204.25

Coefficients
Standard Error
t Stat
2191.3373622 826.0825980388 2.6526855395
-6.9093799251
2.9158907271 -2.3695606495
0.3250204406
0.2385127927 1.3626960505

F
Significance F
12.226897699 0.0027169835

P-value
Lower 95%
Upper 95%
Lower 95.0%
Upper 95.0%
0.0263599118 322.608696007 4060.0660284 322.60869601 4060.0660284
0.0419391483 -13.5055830192 -0.3131768309 -13.505583019 -0.3131768309
0.2060984999 -0.2145329818 0.864573863 -0.2145329818 0.864573863