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    Chapter 14

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    Nadine Santos
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    © All Rights Reserved
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    pter 1a, Part ‘Simple Linear Regression 1 Simple Uinear Repression Model + Leas Squares Method * oetclen of Determination + Motel Assumptions ‘Simple Linear Regression Simple Linear Regression Equation + The simple nea reqresion eatin i Eb) foe Ax 1 Geaph ofthe regression equation sa straight ne, 1 fisthey intercept ofthe repression line. + Aisthestope ofthe epesion ne. 1 Ey)isthe expected vale of y fora even xvlue ‘Simple Linear Regression ‘+ Managerial decisions often ate Based onthe relationship between two ormore varies ow the varios are related The variable being predicted scaled the dependent arable and is ‘denoted by. + The arabes being used to predict the value ofthe depereent ‘arable are called the independent arabes and ae dencted by x ‘Simple Linear Regression Model ‘+ simple inearcegresion involves oneindepandet variable and one +The equation that dseribs how ylelated tow ard an err term SSenocrae Motes + Teretraip between the wo varibes apron by +e sno ner erson adel srouitine + hagas asyichig or ers inependar isi [ema] ‘shed die esi we Larataere Tyan ace cated pratt nate + saranda cae ne rate, ‘Simple Linear Regression Equation 1 Postive Linear Relationship Regret ae a 4 ‘Simple Linear Regression Equation negate tinea Rettonsin ‘Simple Linear Regression Equation 1D No Relationship 3 Estimated Simple Linear Regression Equation Estimation Process ‘The estimated simple linea regression equation be ae) *+ Theeraph scaled the estimated rearesson line ‘gis the yntercept ofthe tne. + buisthe slope of te lin. + Sistheestmated valu of yfora given xvalue. Least Squares Method Least Squares Method 1 Least Squares criterion 1 ope for the Estimate Repression Equation Da 00— min B02 — 90" ete = sbsewad value ofthe dependent variable 1 ale of independent vaable frit obsenation forthe th abeerstion value of dependent variable forth observation 1. estimated value of the cependent variate 2 =mean value for independent arise forthe/ th obieation [y= mean value for dependent variable Least Squares Method ‘Simple Linear Regression + rinercet forthe Eimstd Regression Eastin fxamle: Arman’ Pa Parlor Restaurants by =F be ‘ata was covected rom a sample of 10 Amand’ Paz Parr Restaurants near cole campuses. For the th obsation restaurant inthe sample ste eof the student population sem Spe near Regression ‘Simple Linear Regression arate i mans aa Simple Linear Regression trample: Armand Pz Pasko Resturnts Spe ter be Estimated Regression Eguation crept forthe Estimated Repression Equation bya vn-be= 130-5000) cremated Reprenon foun Coefficient of Determination (2 me octet of determination Pa SSRSST were: SSR = sum of squares du regression S51 total sum of squares Coefficient of Determination [Example Armane’s Pa Parlor Resturant ‘A 2ssejst = 14200/5,730= 9027 “The tegresion relationship ivery strong: 90.27% af the vrs a the sats ean be eploned by the ter felatoranip between the ste ofthe student population an sales Sample Correlation Coefficient y= (ec NOTA DRT Yay = (not Ve were: 1, =the slope ofthe estimated epresion equation Fob tbe Using Excel to Compute the Coefficient of Determination ‘Example: Armand Pa Paror Restaura Adding Vole to Sater Dagar ‘Assumptions About the Error Term & Model assumptions 1. The errr isa random variable with mean of 20, 2. The variance of ,dencted by othe sare fr al aes of The ndependeatvarale 4. The eror¢ fsa normaly dstrbutes random vaible fra values of, Testing for Significance + Pots fora sien regesion lationship emus onducta Frosh ttt crane wouter the ee ter ea] and [Feet * oth ine test an steam of he rane a 1+ The Fests uteto determine whether asigifeateatonship ‘between the dependent arab andthe se of tho dopant arabes: tthe overalsgnince, + the test shows an ovr sgnfance, thet test use to determine wheter each ofthe nal ndopondet vale i Significant, separate ests conducted foreach ofthe Independent ‘arabes in he mode tests eeredto as na sgnfiance, Testing for Significance 1 An tstinate of? “The mean square error (MSE) powides the estimate of 0, ant the nation sao uted, Pe Mse S8e/0-2) Testing for Significance: ¢ Test + Hypotheses ‘Testing for Significance: t Test — Confidence Interval for + Wecanuse 39% condence terval fr ft tet the hypotheses bt sed the test 1 Hs reeced i the hypothesized vale off not ined inthe ‘fidence terval. OD Anestinate ot + Toesmae , we take the square rot of The esutng scaled the tadard ero ofthe estimate. 920 1880/8 = 191.25, Testing for Significance: t Test + Rejection Re Testing for Significance Testing for Significance: Confidence Interval for 2158293 y= 802 3.395 provdesn aes of 00s inthe upper tl. Hence, the p-vaie less than 605 (Ao, "=862> 3.355) We canrefect 1+ Te format conticence interval orf! whet: bet tate, Isthe point estimator, ejain ithe margin feo, ane the fhe vai providing an aea ofan { upper tal ofa rastiavton within 2 dopees of freedom Confidence Interval for 8, Testing for Significance: F Test 1 Rejection Rle Hypotheses Reject H fOls ntincludes inthe confidence ites or HB =0 Hebe0 + 92% conidence eral orf Dy bgy2 5 3.355 (5803) + Texstataie 02.05 19695 = stint + concson ic not ndudedinthe contdence tea Reject Testing for Significance: F Test Testing for Significance: F Test ec [Toemieneieine wae ea Fe Lipemmmernone J ae pale

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