REGRESSION ANALYSIS

Prof. Rosalia R. Arao

LESSON
#15
LEARNING
OUTC MES
Recognize the use of
regression analysis in a
statistical investigation.
Use regression analysis
REGRESSION ANALYSIS
in determining the
relationship between two
variables.
Determine the regression
equation.
Perform the exercises
with accuracy and
precision.
 Correlation (Pearson r)
 to test the significant
relationship between two
variables

Ms. Stephanie T. Gozano-Quiambao

 Simple Linear Regression Analysis
 It is a simple statistical tool used to model the dependence of a
variable on one (or more) explanatory variables.

 The functional relationship may then be formally stated as

equation, with associated statistical values that describe how
well this equation fits the data.
 Regression Analysis Variables

Dependent Variable
 The value being predicted or explained

Independent Variable/s
 The variable that is used to predict or explain the dependent
variable
 Regression Line
 It is the straight line that best fits the scatter diagram. This line is
expressed using the least square regression equation.
30

25 f(x) = 5.66733870967742 x + 13.8046370967742

20
Sales

15

10

0
0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 2.2
Marketing Investment
 Simple Linear Regression
 It is a simple technique for prediction which utilizes
an equation of the form:
Y = a + bX
Where:
Y = predicted score/dependent variable
X = predictor score/ independent variable
a = the y-intercept
b = the slope of the line

Ms. Stephanie G. Quiambao

Example:
The management at GQ Company is interested in determining the extent of the
relationship between advertising and sales. The company’s general manager has
collected the following data on advertising expenditures and gross sales for the past
months (in hundred thousands). Develop a regression model and test whether it is
statistically significant.
Month Advertising Sales Month Advertising Sales

Jul 1 19.5
Jan 1.2 21.2
Aug 0.6 17.3
Feb 1.4 21.8
Sep 0.8 17.5
Mar 0.5 17
Oct 1.8 24
Apr 2.1 25.5
Nov 1.9 23.8
May 2 26.2
Dec 1.5 22.3
Jun 1.6 22.5 Ms. Stephanie G. Quiambao
 3) Determine the Simple Regression Line

Advertising Sales

Jan 1.2 21.2

Feb 1.4 21.8
Mar 0.5 17
Apr 2.1 25.5
May 2 26.2
Jun 1.6 22.5
Jul 1 19.5
Aug 0.6 17.3
Sep 0.8 17.5
Oct 1.8 24
Nov 1.9 23.8
Dec 1.5 22.3
1) Draw the Scatter Diagram:

Sales and Advertising Expenses

30
Sales (in hundred thousand)

25

20

15

10

0
0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 2.2
Advertising (in hundred thousand)
 Sales and Advertising Expenses
30
Sales (in hundred thousand)

25 f(x) = 5.66733870967742 x + 13.8046370967742

20

15

10
trendline
5

0
0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 2.2
Advertising (in hundred thousand)
Simple Regression #2

Years of Experience Annual Salary ($)

4 70,000

8 108,000

5 86,750

10 100,000

7 120,250

8 137,000

12 123,000

6 79,500

3 53,250

8 137,000

14 237,500

11 187,250

13 211,000

7 97,000

12 204,000
Given the data for 15 employees of ABC company , Determine the following:

a) Develop a regression model that could be used to predict the salary based on the

the number of years of experience.

b) Predict the salary of an employee who has 9 years of experience.

c) Give the values of r and r2 for your regression model.

d) What is the correlation coefficient?

e) Plot the scatter diagram to verify your answer in (d).

f) How much of the variability in employee salary can be explained by the regression model?

g) Is the regression model statistically significant?

Group Activity:

1. Choose the following among your group members.

a. Presenter – will create and present ppt.
b. Reporter/s – will report the group activity.
c. Writer/s – will consolidate the data in MS Word for submission.
2. For the working data, the group must select quantitative dependent and independent variables.
Example: Number of Sleeping Hours
Number of hours Awake in Statistics class
3.Collect the data among your group members/(if group members are few, you may survey from the other
group members) and create the ff:
d. Scatter diagram and trendline
e. Simple Linear Regression Equation
4. Assign value of Y to predict the value of X and interpret the result.
5. Reporter will present after 20minutes.
KEEP SAFE EVERYONE
END