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# Commerce 2502 Predictive Analytics

Practice Exam
Summer 2015

## Student Name (please print clearly):______________________

Student Number:______________________________
Time: 3 hrs.
Closed Book. You may have two sheets (8.5 11, two sided) of formulas. Make sure you show the logic of
your answers. You will lose points if logic is not shown. Good Luck!

Question
1
2
3
4
5
6
Total

Score

## Problem 1 (20 Marks)

The superintendent of a school district wanted to predict the percentage of student passing a sixth-grade
proficiency test. She obtained the data on percentage of students passing the proficiency test (% Passing), daily
average of the percentage of students attending class (% Attendance), average teacher salary in dollars
(Salaries), and instructional spending per pupil in dollars (Spending) of 47 schools in the state.
Following is a multiple regression output with Y = % Passing as the dependent variable, X1 = :%
Attendance, X2 = Salaries and X3 = Spending.

The coefficient of multiple determination R 2j of each of the 3 predictors with all the other remaining
predictors are, respectively, 0.0338, 0.4669, and 0.4743. The output from the best-subset regressions is given
below:

## b) Is multicollinearity a problem with the data set? Explain your reasoning.

c) Using the best subsets approach to model selecting which model would you choose?

## Problem 2 (10 Marks)

The following data show the percentage of suburban Americans who have a high-speed Internet connection at
home (Pew Internet Rural Broadband Internet Use Memo, February 2006.)
Year
2001
2002
2003
2004
2005

Suburban
9
17
23
29
40

## Problem 3 (20 Marks)

Managers at a financial institution developed a logistic regression model to predict the probability of a
person being approved for a loan. The dependent variable (response) in the model is equal to 1 if the person
is approved for the loan and 0 otherwise. The independent variables (predictors) are the persons current
yearly salary (in dollars) and their past credit history. The credit history is equal to 1 if the person has good
credit and 0 otherwise.
The following is the Minitab output for the logistic regression model:

## a) State the logistic regression equation.

b) At the 0.05 level of significance, is there evidence that salary makes a significant contribution to the
model?

c) Using the logistic regression equation, predict the probability that a persons loan is approved if they are
currently earning \$30,000 per year and have a good credit history.

## Problem 4 (20 Marks)

a) What are the assumptions necessary to conduct an analysis of variance for a completely randomized
experiment?

b) North American Oil Company is attempting to develop a reasonably priced gasoline that will deliver
improved gasoline mileages. As part of its development process, the company would like to compare
the effects of three types of gasoline (A, B, and C) on gasoline mileage. For testing purposes, North
American Oil will compare the effects of gasoline types A, B, and C on the gasoline mileage obtained
by a popular compact model called the Lance. Suppose the company has access to 1,000 Lances that are
representative of the population of all Lances, and suppose the company will utilize a completely
randomized experimental design that employs samples of size five. In order to accomplish this, five
Lances will be randomly selected from the 1,000 available Lances. These autos will be assigned to
gasoline type A. Next, five different Lances will be randomly selected from the remaining 995 available
Lances. These autos will be assigned to gasoline type B. Finally, five different Lances will be
randomly selected from the remaining 990 available Lances. These autos will be assigned to gasoline
type C.

8.525

=12.74

b1)

## Complete the analysis of variance table.

b2)

Specify the appropriate hypothesis to test and your statistical conclusion at = .05.

## Problem 5 (20 Marks)

The Jacobs Chemical Company wants to estimate the mean time (minutes) required to mix a batch of material
on machines produced by three different manufacturers. To limit the cost of testing, four batches of material
were mixed on machines produced by each of the three manufacturers.

a) Write a multiple regression equation that can be used to analyze the data.

b) In terms of the regression equation coefficients, what hypotheses must we test to see whether the mean
time to mix a batch of material is the same for all three manufacturers?

## Problem 6 (10 Marks)

a) Use the Holt-Winters method of fitting to the number of arrivals to compute the smoothed level and
trend with a smoothing constant of 0.3 for both levels and trend for the following data.
Mondays
1
2
3
4
5
6

Arrivals
60
72
96
84
36
48

b) Compute the exponential smoothing model using a smoothing constant of .25 for the arrivals data in a).