Case Study of Pharmaceutical Company

A CEO of a large pharmaceutical company is evaluating whether to place more money in next
year's budget for television advertising for XBC, a new drug for controlling asthma. The cost of
advertising is always an important consideration in the phase I roll-out of a new drug. He asks
whether there is a strong relationship between the number of orders received and the amount of
money spent on television advertising for drugs.

i. Perform Simple linear regression data analysis (Linear Regression Equation) on orders vs
advertising using the chart below. Also Compute Sum of squares of Error, Co-efficient of
determination and interpret the results wisely. (8 Marks)
ii. Write Applications of Linear Regression For Businesses (2 Marks)

Month X=Advertising cost (in thousands) Y= No. of orders (in millions)

1 $68.93 4.902

2 72.62 3.893

3 79.58 5.299

4 58.67 4.130

5 69.18 4.367

6 70.14 5.111

7 83.37 3.923

8 68.88 4.935

9 82.99 5.276

10 75.23 4.654

11 81.38 4.598

12 52.9 2.967

13 61.27 3.999

14 79.19 4.345

Submission’s Deadline: 22 May, 2020