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Logistic Regression What are the odds Playing the odds Using Mintab Interpreting the results Examples

A call centre monitors the relationship between the time on hold & abandoned calls
Calls 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Wait 10 12 15 18 18 20 22 26 27 27 28 29 35 38 42 Abandon N N N N N N N N Y N N N Y Y N Calls 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Wait 43 44 49 50 52 60 64 68 75 80 86 89 92 97 100 Abandon N N Y N Y N Y Y N N N Y N Y Y

As is observed it is seen that longer calls have to wait, the greater the probability that they will be abandoned. I It is important that call centre balances the cost of lost customers against centre staffing costs
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A solution to the problem facing the call centre, calls for a regression analysis An equation of the form z = o + 1Xwait_time Where o & 1are constants calculated from data; z is a function that gives probability of a caller hanging after

X wait_time ` The regression equation gives us the value of z ` The probability can be calculated using the function p = ez/(1+ez) This is called the logit function. Here, p is the probability of caller hanging up call e is the exponential. It is a constant equaling roughly 2.718 that can found out by Excel function EXP(z)

The term p/(1-p) is known as odd. The odds are the probability of success divided by the probability of failure Suppose using Mintab we find that the regression equation is z= 2.25 + 0.031Xwait_time For a wait of 30 minutes, z = -1.35 So odds of a caller hanging up after 30 minutes is given by p/(1-p) = ez = e-1.35 = 0.21 & the probability that the caller hangs up is p = ez/(1+ez) = 0.17 = 17%

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Odds = ez = e o + 1X = e o x e 1X Using this version of the equation, the odds at time n & time n+1 are Oddsn = ez = e o x e 1n & Oddsn+1 = ez = e o x e 1n x e 1 = e 1x oddsn The significance of this is that every time x (or n) increases by 1, the odds are multiplied by a fixed amount. This is known as odds ratio. Odds ratio = e 1

To apply regression analysis to binary data we use logit function- p = ez/(1+ez), where z= = o + 1X

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Odds = ez Odds ratio = e

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Mintab Start regression

Regression

Binary logistic

A study was conducted to determine relationship between years of service & presence of corrosion in a component used in a power station. Find probability of corrosion after 10 years of service. How much does the probability increase for each year.

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