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She has five options of specializations Finance, Marketing , IT, General Management and Operations and she is inclined towards Finance, Marketing and Operations . She already got admissions in various colleges. Unable to decide which college to join she took the advice of friends, seniors and classmates but could not make any decision .She approached a consultant for advice whether to join the college or not. She wanted to join a college which has average salary package above 10lakhs and she could not find any data from the official reports published by XYZ college. Also she was curious to know what are the salaries paid for each of the specialization she was interested. The consultant takes up the problem and evaluates the placement records and attendance lists about students taking up various specializations. He was able to access the past records from XYZ College with its permission. The following is the data furnished by College Number of students in batch=400 Number of students placed in different streams in Finance, Marketing and Operations during the years 2002-2010. Finance Students 118 113 112 120 127 126 128 127 129 Marketing Students 129 127 126 122 125 124 121 119 118 Operations Students 95 97 98 98 98 100 103 102 104
Year 2002 2003 2004 2005 2006 2007 2008 2009 2010
Students taking various specialization and final placements during the year 2010.These probabilities are conditional probabilities .For example the value 0.10 in first row denotes the probability that given the student is placed in Finance ,the probability that he takes marketing as specialization.
Specialization P(Specialization/Placement) Finance Marketing Operations Finance 0.85 0.03 0.03 Marketing 0.10 0.91 0.02 Operations 0.05 0.06 0.95
Placement
The average salary of each specialization (Finance, Marketing and Operations) from year 2002-2010 are given in the table below: Finance(Rs. in lakhs) Marketing(Rs. in lakhs) 8.3 8.1 8.2 8.42 9.7 9.2 9.56 9.8 10.34 10.6 11.89 11.23 10.23 10.5 11.59 11.1 11.23 11.34 Operations(Rs. in lakhs) 7.12 7.3 8.4 8.92 9.3 10 9.2 9.8 10.4
Year 2002 2003 2004 2005 2006 2007 2008 2009 2010
After gathering the data consultant assured her that he would investigate about 1) What salary can she expect if she joins XYZ in Finance, Marketing and Operations? 2) What is the expected salary package from each specialization?
Solution Procedure: Using Linear Regression Analysis the consultant tries to forecast the values of Salaries and Number of students placed in each specialization. (The calculations and results are in Appendix 1.1 to 1.6) Variable Salary_F Salary_M Salary_Op Place_F R 0.87 0.937 0.929 0.854 Constant -835.079 -826.804 -770.059 -4053.11 Year .421 .417 .388 2.067 Forecast 11.55 11.87 10.21 133
placed in Finance No. of students placed in Marketing No. of students placed in Operations
Place_M
0.953
2664.378
-1.267
116
Place_Op
0.957
-2006.856
1.050
105
Using the forecasted values for students placed in different specializations ,he calculates probabilities that a student takes a particular specialization are placed. The following table gives the values of probabilities: Stream Finance Marketing Operations P(Placement in Stream) 133/400=0.3325 116/400=0.29 105/400=0.2625
The following is the table for finding out conditional probabilities Specialization Placement(Ei) P(Ei) Finance Finance 0.3325 Marketing 0.29 Operations 0.2625 P(S/Ei) 0.85 0.03 0.03 P(S & Ei) 0.283 0.0087 0.0078 0.2995 0.0332 0.2639 0.0052 0.3189 0.0166 0.0174 0.2493 0.2833 P(Ei/S) 0.94 0.029 0.026
Marketing
Operations
The consultant draws the decision tree for the above probability values and payoff values forecasted using regression analysis. See Appendix 1.7
Conclusions: 1) The expected value of the salary if you join XYZ in 2011 is Rs. 9.934 lakhs and Sneha rejects the College because its return value is less than Rs.10 lakhs 2) Finance as specialization gives highest salary of Rs.11.466lakhs followed by Marketing with a salary of Rs.11.175 lakhs and Operations with salary of Rs.10.367 lakhs
Model Summary Model 1 R .929a R Square .863 Adjusted R Square .843 Coefficientsa Unstandardized Coefficients Model 1 (Constant) Year B -770.059 .388 Std. Error 117.369 .059 .929 Standardized Coefficients Beta t -6.561 6.637 Sig. .000 .000 Std. Error of the Estimate .45321
a. Dependent Variable: Salary_Op The forecast salary of Operation students Y=A+BX Y=-770.059+.388*2011=10.21 1.2)Salary M
Model Summary Model 1 R .937a R Square .877 Adjusted R Square .859 Std. Error of the Estimate .45730
a. Dependent Variable: Salary_M The forecast salary of Marketing students Y=A+BX Y=-826.804+0.417*2011=11.87 1.3)Salary Fin Model Summary Model 1 R .870a R Square .757 Adjusted R Square .722 Std. Error of the Estimate .69936
Coefficientsa Unstandardized Coefficients Model 1 (Constant) Year B -835.079 .421 Std. Error 181.115 .090 .870 Standardized Coefficients Beta t -4.611 4.667 Sig. .002 .002
Model 1
R .854a
R Square .729
a. Predictors: (Constant), Year Coefficientsa Unstandardized Coefficients Model 1 (Constant) Year B -4023.511 2.067 Std. Error 955.494 .476 .854 Standardized Coefficients Beta t -4.211 4.339 Sig. .004 .003
The forecast number of students taking Finance as specialization Y=A+BX Y= -4023.511+2.067*2011=133 1.5)Stud_M Model Summary Model 1 R .935a R Square .873 Adjusted R Square .855 Std. Error of the Estimate 1.41197
a. Predictors: (Constant), Year Coefficientsa Unstandardized Coefficients Model 1 (Constant) Year B 2664.378 -1.267 Std. Error 365.662 .182 -.935 Standardized Coefficients Beta t 7.286 -6.949 Sig. .000 .000
a. Dependent Variable: Stud_M The forecast number of students taking Marketing as specialization Y=A+BX
Y= 2664.378- 1.267*2011=116 1.6)Stud_op Model Summary Model 1 R .957a R Square .916 Adjusted R Square .904 Std. Error of the Estimate .93138
a. Predictors: (Constant), Year Coefficientsa Unstandardized Coefficients Model 1 (Constant) Year B -2006.856 1.050 Std. Error 241.202 .120 .957 Standardized Coefficients Beta t -8.320 8.733 Sig. .000 .000
1.7)
Finance
0.029 PM 11.87*0.029=0.344
PO
10.21*0.026=0.265
11.55*0.104=1.19
PM
11.87*0.827=9.81
PO
10.21*0.016=0.16
PF
11.55*0.058=0.669
PM
11.87*0.061=0.724
PO
10.21*0.879=8.974
PO-Placed in Operations