OTIN

YEAR MAT C EMPL INT SALES

13148.
1 1742.0 37.0 0 126.0 3973.0
14871.
2 2296.0 103.0 0 208.0 4871.0
15340.
3 2356.0 126.0 0 265.0 4315.0
15642.
4 2673.0 81.0 0 410.0 5567.0
15780.
5 2796.0 164.0 0 460.0 6537.0
16298.
6 3172.0 500.0 0 336.0 7460.0
16644.
7 3503.0 469.0 0 202.0 7638.0
17229.
8 3824.0 475.0 0 286.0 8295.0
17351.
9 3407.0 370.0 0 416.0 6891.0
17306. 12844.
10 5123.0 382.0 0 526.0 0
17952. 14428.
11 5733.0 684.0 0 513.0 0
18207. 15493.
12 6100.0 535.0 0 713.0 0
18453. 18653.
13 6600.0 414.0 0 877.0 0
18903. 21978.
14 9030.0 383.0 0 1206.0 0
18797. 29562.
15 15518.0 447.0 0 1697.0 0
19129. 37821.
16 21380.0 1248.0 0 1861.0 0
19280. 49826.
17 27510.0 972.0 0 2680.0 0
19394. 64521.
18 36479.0 1385.0 0 2990.0 0
19357. 72392.
19 35131.0 3937.0 0 3211.0 0
19080. 71678.
20 33108.0 4398.0 0 4625.0 0

Table 1

Sensitivity: Internal (C3)

 1. a) From the data table given above, we can have the following combined regression model
where Sales is the response, and Other Incomes (OTINC.), Personnel (EMPL), Material (MAT),
and Interest payment (INT) as the predictors.

SUMMARY
OUTPUT

Regression Statistics
Multiple R 0.99796115
R Square 0.99592645
Adjusted R Square 0.99484017
Standard Error 1675.33331
Observations 20

ANOVA
  df SS MS F Significance F
Regression 4 10293136487 2573284122 916.8226 1.00613E-17
Residual 15 42101125.56 2806741.704
Total 19 10335237613      

Upper Lower Upper

  Coefficients Standard Error t Stat P-value Lower 95% 95% 95.0% 95.0%
- -
Intercept 10673.8149 5236.5792 -2.0383 0.0596 -21835.3192 487.6894 21835.3192 487.6894
MAT 1.3275 0.1135 11.6956 0.0000 1.0856 1.5695 1.0856 1.5695

Sensitivity: Internal (C3)

OTINC 3.0076 0.6941 4.3328 0.0006 1.5281 4.4871 1.5281 4.4871
EMPL 0.7637 0.3225 2.3680 0.0317 0.0763 1.4511 0.0763 1.4511
INT 2.4940 1.3207 1.8884 0.0785 -0.3210 5.3090 -0.3210 5.3090

The predicted Sales can be

Sales= 10673.81 + 1.3275MAT + 3.0076OTINC + 0.7637EMPL + 2.4940INT

b) In the combined model, the p values of predictors MAT, OTINC, EMPL and INT are 0.0, 0.0006,
0.0317 and 0.0785 respectively. When compared with cut off value of p (0.05), we get the
following

Useful or Significant predictors: MAT, OTINC, EMPL

Insignificant Predictor: INT

c) In this model we find that coefficient of EMPL variable is 0.7637 and the p value is less than 0.05,
which means it is significant in estimating sales. It has a positive relationship with sales and
hence sales increase when the value of EMPL increases. If we increase EMPL (personnel) by one
unit, then sales will increase by 0.7637 units or if we increase EMPL by 1000 unit then sales will
be increased by 763.7units and vice versa.
d) As we find in this model that the R2 has value 0.9959 (99.59%) which means the model explains
99.59% of the total variation in sales. This also means that the model is very useful and as shown
by the value the predictors have a strong relationship with response.

There are three significant predictors: MAT, OTINC, EMPL

Insignificant Predictor: INT
Also, the response has a positive linear relationship with predictors.

2. a) The combined model can be given as shown below which can be obtained from running regression
analysis on Table 1

Regression Statistics
Multiple R 0.9664266
R Square 0.9339804

Adjusted R
Square 0.9163751
Standard
Error 497.30402
Observations 20

ANOVA
Significance
  df SS MS F F

Sensitivity: Internal (C3)

 1.12435E-
Regression 4 52480724.48 13120181 53.05128 08
Residual 15 3709669.317 247311.3
Total 19 56190393.8      

Coefficient Standard Upper Lower Upper

  s Error t Stat P-value Lower 95% 95% 95.0% 95.0%
- - -
Intercept -3998.6376 1554.4202 -2.5724 0.0212 -7311.8058 685.4695 7311.8058 685.4695
MAT -0.0287 0.0337 -0.8529 0.4071 -0.1006 0.0431 -0.1006 0.0431
OTINC 0.5213 0.2060 2.5301 0.0231 0.0821 0.9605 0.0821 0.9605
EMPL 0.2964 0.0957 3.0956 0.0074 0.0923 0.5004 0.0923 0.5004
INT 0.8085 0.3920 2.0624 0.0569 -0.0271 1.6441 -0.0271 1.6441

PBT =-3998.63+-

b) The significant of any variable depends upon its P value (<0.05 or <5%) so in this model there are
four variables out of these, two variables (MAT, INT) having higher p value (>0.05) and another
two variables (OTINC and EMPL) having Less p value (<0.05) so only two variables OTINC and
EMPL are significant in explaining sales.
c) In this model we find that coefficient of IMP variable is 0.8085 and the p value is 0.0569, which
means it is insignificant in estimating sales. It has a positive relationship with PBT but the
predictor is not significant.
d) As we find in this model that the R2 has value 0.9339 (99.39%) which is coefficient of
determination. This means that the model explains 99.59% of the total variation in sales. The
predictors have a strong relationship with response.
Out of four predictors, two(OTINC and EMPL) are having p value less than 0.05 and two
predictors (MAT, INT) are having p value higher than 0.05

Useful or Significant predictors: OTINC, EMPL

Insignificant Predictors: INT, MAT

Also, the response has a positive linear relationship with predictors.

Sensitivity: Internal (C3)