Design A

DV(Y) IDV(X)
Advertisi Step1 : Identify IDV and D
Sales(Y) Price ng SP
96 4 4 2.8 Dependent Variable (Y)
90 2 2.4 2.2 Independent Variable (X)
95 5.2 3 2.4
92 5 2.5 1.6
95 4 3.5 2
94 5 3 2
94 4 3 1.6
94 3 3.4 1.2
99 5.2 4.2 2
93 4 2.9 1.2
95 2.7 3.1 1.2
98 6 3 2.2
Beta
Coefficien Significance?
97 4 3.8 2.4 Q4a ts P value
94 4.4 2.5 2 Intercept 80.99781

92 2.4 3 1.2 Price 1.050029

Advertisin
g 3.002462
Sales
promotio
n -0.104658

Regression Equation

Q4b B
Sales=80.99+1.05*PriSales= 2+0.17*price+0.24*sales promotion
A

Pencil=10
 Calculate Sales for bottle with data from table for design A

cost=5 Q4c

sell=10 A B
profit? Sales

tip:
Q5 Calculate Profit in selling bottlesfor design A
Profit= Sales*(Price-Cost)
Profit for Profit for
design A design B

Which design should we invest?

Q6
????? Design A
Design A Design B Q7 Calculate the impact on sales if price is increased by 10 rs. Compare sal
Price 100 70 Design A Design B

Sales=80.
Regressio 99+1.05* Sales= 2+0.17*price+0.24*sales promoti
n price+3.0 Reg.
Adv 5 6 Equation 02*adv Equation

SP 2 3 old sales= old sales=

new new
Cost 60 50 sales= sales=
new price 110 80 Change= Change=
new-old
Which design is impa A????

Q8 Rerun the regression using only significant variables and compare the a

Significan
Paramete All t
r variables variables
R Square
Adjusted
R Square

Explain reason for change

 Bivariate (Simple linear regression) 2 variables(Sales=8+7Incentiv

Regression Multivariate (multiple regression) More than 2variable, MLR

Step1 : Identify IDV and DV mathematical relationship/ equation between 2 or more variables
Dependent Variable (Y) Y=B0+B1*X1+b2*X2
Independent Variable (X) y-depenedent variable B0- intercept
X1,X2-IDV B1and b2- regression coefficient

Sugar level =B0+B1*No of sweets I eat

DV IDV

SUMMARY OUTPUT

Regression Statistics

correlatio
Multiple R 0.89959 n
R Square 0.809262 indicates the amount of varia
Adjusted fitted r
R Square 0.757242 square
Standard
Error 1.160984

Observati
ons 15

Analysis of variance

ANOVA
+0.24*sales promotion
df SS
Regressio
n 3 62.90662
table for design A

Residual 11 14.82671

Total 14 77.73333

Coefficien Standard
ts Error
Intercept 80.99781 2.05497
Price 1.050029 0.297702
Advertisin
g 3.002462 0.609407
SP -0.104658 0.691759

creased by 10 rs. Compare sales for two different designs Sales=80.99+1.05*Price+3.002*adv

0.17*price+0.24*sales promotion

t variables and compare the adjusted r square

2 variables(Sales=8+7Incentive)

More than 2variable, MLR (Sales=6+4.02*Incentive+3*advertising+2* sales promotion

indicates the amount of variance explained by regresion equation

ANOVA

H0:
Regresion
is not
significant

Ha:
regressio
n is
significant
Significan
MS F ce F p value p<.05

20.96887 15.55689 0.000285 p>.05

 p<.05, regression is possible Reject Ho,
Regressio
n is
1.347883 significant

Fail to
reject ho,
regressio
n is not
significant

p<.05, significant
t Stat P-value
39.41557 0 sign ????? always use intercept
3.527117 0.0047 sign

4.926858 0.0005 sign

-0.151293 0.8825 not sign

t>1.96 ,sig p<.05,

n significant

rice+3.002*adv
 Roccinante
Sales Price Top
Mileage
Cars (in 1,000 (in lakh speed Cars
units) rupees) (Km/ltr) (Km/hr)

Rocinante Marengo
1 171.877 6.1 15.8 168.2 1
Rocinante Marengo
2 139.796 6.1 12.1 149.6 2
Rocinante Marengo
3 178.947 9.9 17 173.4 3
Rocinante Marengo
4 140.022 5.8 11.6 170.6 4
Rocinante Marengo
5 186.476 10 17.2 175 5
Rocinante Marengo
6 192.123 6.5 17.6 173.1 6
Rocinante Marengo
7 175.085 5.5 16 184.6 7
Rocinante Marengo
8 146.882 8.4 13 175.7 8
Rocinante Marengo
9 202.847 6.6 19.3 166.7 9
Rocinante Marengo
10 149.933 8.8 13.3 175.4 10
Rocinante Marengo
11 171.579 9.5 15.8 150.9 11
Rocinante Marengo
12 201.512 9.2 19.2 140.5 12
Rocinante Marengo
13 142.604 8.1 11.7 150.2 13
Rocinante Marengo
14 135.158 5.4 11.2 146.2 14
Rocinante Marengo
15 107.322 5.6 7.8 151.2 15
Rocinante Marengo
16 199.699 6.3 19 143.2 16
Rocinante Marengo
17 202.875 5.8 19.7 178.9 17
Rocinante Marengo
18 204.406 7.7 19.5 168.2 18
Rocinante Marengo
19 107.331 7.2 7.5 164.7 19
Rocinante Marengo
20 190.345 8.4 18.1 182.7 20
Rocinante Marengo
21 108.419 8.4 7.9 165.7 21
Rocinante Marengo
22 150.249 5.7 12.6 137 22
Rocinante Marengo
23 155.882 5.5 12.9 173.9 23
Rocinante Marengo
24 100.98 8.4 7.6 165.1 24
Rocinante Marengo
25 182.679 5.6 16.7 160.1 25
Rocinante Marengo
26 166.752 9.9 15.5 155.6 26
Rocinante Marengo
27 121.561 6.2 9.5 155.4 27
Rocinante Marengo
28 174.256 9.9 16.3 161.9 28
Rocinante Marengo
29 119.018 6.5 9.1 146.8 29
Rocinante Marengo
30 169.842 7.1 15.3 149.5 30
Rocinante Marengo
31 198.311 9.6 19.1 146.5 31
Rocinante
32 204.875 5.8 19.4 178.9
Rocinante
33 119.561 6.2 9.4 175.4
Rocinante
34 203.875 5.9 19.4 175.9
Rocinante
35 118.561 6.1 9.4 165.4
Marengo
Sales Price Top
Mileage
(in 1,000 (in lakh speed
units) rupees) (Km/ltr) (Km/hr)

20.896 42.5 9.3 199.4

31.048 36 9.7 235.2

29.904 54.7 16.6 240.8

28.792 42.7 11.7 232.5

16.776 44.9 13.7 188.8

18.928 35.5 9.6 184.2

22.776 51.3 13.7 207.7

36.824 30.4 12.6 249.5

22.216 38.4 16.2 175.8

35.456 32.2 9.6 245.6

28.576 59.4 11.3 223.3

33.648 50.8 13.6 240

33.44 57.5 13.5 250

34.912 44.6 11.1 247.4

24.016 34.6 14.1 192

20.992 56.4 13.4 201.2

21.696 41.4 12.8 193.3

17.832 53.7 16 202

25.624 44.8 12.7 208.9

21.92 32.4 13.6 176.9

24.792 40.9 11.6 218.2

22.256 44.1 11.4 190

15.488 46.6 16.3 176.8

21.64 31.4 14.5 178.9

23.264 54.7 14.3 192.3

19.328 37.9 9.4 184.1

27.216 52.9 15.3 240.3

23.096 42.7 15 192.1

17.824 54.9 13.5 199

19.144 44 11.8 181.1

21.6 42.2 9.3 181.2

 Type of
Method 1 Test tail
Time
Sample (min) Dummy Step 1 pop stdev

State
the null
and
Alterna H0:
te Mean
Hypoth time= is
1 32 0 esis 25 min known z test

Ho:=, Ha
not
equal to I Ha: Ha:
H0
>=,Ha< I Mean Mean
Ho<=, time ≠ not time ≠
2 32 0 Ha> 25 min known t test 25 min

Ha:
Mean
time >
3 31 n<30 test 25 min

Ha:
Mean
time <
4 33 Step 2 n>30 z test 25 min

5%
Level of level of
signific significa
5 32 ance nce
6 28
Hypothesi
7 31 Step 3 s test t test
 Decide
test to
be used Sample
8 26 (z/t ) size (n) 29

Sample
Calculat standar
e test d
statistic deviatio
9 27 s n 2.13 stdev.s
Calculat Hypoth
ep esized
10 28 values mean 25

Sample
11 31 mean 29.34 average
http://courses.atlas.illinois.edu/spring2016/STAT/STAT200/pt.html

Std
error of standard dev/sqrt of sample siz
mean
12 31 (SE) 0.39

Degree
s of
freedo
13 29 n<30,t m 28 n-1

t-test (sample mean-hypo mean)/s.e.

14 29 n>30-z statistic 11.0057

15 29 p-value 0 *0.000

16 27 1E-11
Interpreta
17 33 Step 4 tion
 Rule
(level
of
signific
ance-
18 30 5%)

If
p≤.05, p(0.000)<alpha(0.05), Reject null hypothesis
Reject
19 29 Ho

if
p>.05,
Fail to
reject
20 28 Ho
21 28
22 31

H0:
Mean
time=
23 28 Step 5 25 min
Types Interpreta
24 27 of Error tion

Type 1
Rej H0 Mean time is 25, but we rejected
when
H0 is
25 26 true

Type 2
Fail to
rej Ho Mean time is not 25min, but we fail to reject(acc
when
H0 is
26 30 false
27 26
Business
28 31 decision?
 Rechec
k our
29 28 Alpha Type 1 claim
Type 2 Launch

H0 true H0 false
Type
1(alpha
Rej Ho , los) Correct
Fail to
Reject
Ho Correct Type 2
two tail

right tail

left tail

t-Test: Two-Sample Assuming Unequal Variances

 Time (min)

Dummy

Mean 29.34483 0

Variance 4.519704 0

Observati
ons 29 2

d dev/sqrt of sample size Hypothesi

zed Mean
Differenc
e 25

df 28

e mean-hypo mean)/s.e.
t Stat 11.00567
P(T<=t)
one-tail 0
t Critical
one-tail 1.701131
P(T<=t)
two-tail 0
 t Critical
two-tail 2.048407

ject null hypothesis

but we fail to reject(accepted)

 Design A
DV(Y) IDV(X)
Advertisi Step1 : Identify IDV and D
Sales(Y) Price ng SP
96 4 4 2.8 Dependent Variable (Y)
90 2 2.4 2.2 Independent Variable (X)
95 5.2 3 2.4
92 5 2.5 1.6
95 4 3.5 2
94 5 3 2
94 4 3 1.6
94 3 3.4 1.2
99 5.2 4.2 2
93 4 2.9 1.2
95 2.7 3.1 1.2
98 6 3 2.2
Beta
Coefficien Significance?
97 4 3.8 2.4 Q4a ts P value
94 4.4 2.5 2 Intercept 80.99781

92 2.4 3 1.2 Price 1.050029

Advertisin
g 3.002462
Sales
promotio
n -0.104658

Regression Equation

Q4b B
Sales=80.99+1.05*PriSales= 2+0.17*price+0.24*sales promotion
A

Pencil=10
 Calculate Sales for bottle with data from table for design A

cost=5 Q4c

sell=10 A B
profit? Sales

tip:
Q5 Calculate Profit in selling bottlesfor design A
Profit= Sales*(Price-Cost)
Profit for Profit for
design A design B

Which design should we invest?

Q6
????? Design A
Design A Design B Q7 Calculate the impact on sales if price is increased by 10 rs. Compare sal
Price 100 70 Design A Design B

Sales=80.
Regressio 99+1.05* Sales= 2+0.17*price+0.24*sales promoti
n price+3.0 Reg.
Adv 5 6 Equation 02*adv Equation

SP 2 3 old sales= old sales=

new new
Cost 60 50 sales= sales=
new price 110 80 Change= Change=
new-old
Which design is impa A????

Q8 Rerun the regression using only significant variables and compare the a

Significan
Paramete All t
r variables variables
R Square
Adjusted
R Square

Explain reason for change

 Bivariate (Simple linear regression) 2 variables(Sales=8+7Incentiv

Regression Multivariate (multiple regression) More than 2variable, MLR

Step1 : Identify IDV and DV mathematical relationship/ equation between 2 or more variables
Dependent Variable (Y) Y=B0+B1*X1+b2*X2
Independent Variable (X) y-depenedent variable B0- intercept
X1,X2-IDV B1and b2- regression coefficient

Sugar level =B0+B1*No of sweets I eat

DV IDV

SUMMARY OUTPUT

Regression Statistics

correlatio
Multiple R 0.89959 n
R Square 0.809262 indicates the amount of varia
Adjusted fitted r
R Square 0.757242 square
Standard
Error 1.160984

Observati
ons 15

Analysis of variance

ANOVA
+0.24*sales promotion
df SS
Regressio
n 3 62.90662
table for design A

Residual 11 14.82671

Total 14 77.73333

Coefficien Standard
ts Error
Intercept 80.99781 2.05497
Price 1.050029 0.297702
Advertisin
g 3.002462 0.609407
SP -0.104658 0.691759

creased by 10 rs. Compare sales for two different designs Sales=80.99+1.05*Price+3.002*adv

0.17*price+0.24*sales promotion

t variables and compare the adjusted r square

2 variables(Sales=8+7Incentive)

More than 2variable, MLR (Sales=6+4.02*Incentive+3*advertising+2* sales promotion

indicates the amount of variance explained by regresion equation

ANOVA

H0:
Regresion
is not
significant

Ha:
regressio
n is
significant
Significan
MS F ce F p value p<.05

20.96887 15.55689 0.000285 p>.05

 p<.05, regression is possible Reject Ho,
Regressio
n is
1.347883 significant

Fail to
reject ho,
regressio
n is not
significant

p<.05, significant
t Stat P-value
39.41557 0 sign ????? always use intercept
3.527117 0.0047 sign

4.926858 0.0005 sign

-0.151293 0.8825 not sign

t>1.96 ,sig p<.05,

n significant

rice+3.002*adv
 Method 1
Time
Sample (min) Dummy Step 1

State
the null
and
Alterna H0:
te Mean
Hypoth time=
1 32 0 esis 25 min

Ha:
Mean
time ≠
2 32 0 25 min
3 31
4 33 Step 2

Level of 5% level
of
signific significan
5 32 ance ce
6 28
Hypothesi
7 31 Step 3 s test

Decide
test to
be used Sample
8 26 (z/t ) size 29

Sample
Calculat standar
e test d
statistic deviatio
9 27 s n 2.13 stdev.s
 Calculat Hypoth
ep esized
10 28 values mean 25

Sample
11 31 mean 29.34
http://courses.atlas.illinois.edu/spring2016/STAT/STAT200/pt.html
average

Std
error of standard
dev/sqrt
mean of sample
12 31 (SE) 0.39 size

Degree
s of
freedo
13 29 m 28 n-1

(sample
mean-
hypo
t-test mean)/s.e
14 29 statistic 11.00567107 .

15 29 p-value 1.12E-11 *0.000

16 27
Interpreta
17 33 Step 4 tion
18 30 Rule

If
p≤.05,
Reject
19 29 Ho

if
p>.05,
Fail to
reject
20 28 Ho
21 28
22 31
23 28 Step 5
Types Interpreta
24 27 of Error tion

Type 1
Rej H0 Mean time taken to charge is 25 min, which we rejected
when
H0 is
25 26 true

Type 2
Fail to
rej Ho Mean time taken to charge was not 25 min, but we fail to reje
when
H0 is
26 30 false
27 26
Business
28 31 decision?
29 28
which we rejected

5 min, but we fail to reject (we accepted)