Case Study Copy Volume estimation in Xerox Corporation

This example is based on an actual application at Xerox Corporation. The only departure
from reality is the change in the data. The original data are proprietary, and the example
has been made simpler by introducing a small sample of fabricated data.
At Xerox, an extensive market research study was conducted. A sample of 500 small
establishments was taken from a list of 900,000 small establishments. A small
establishment was defined to be an establishment with 50 or fewer employees. The key
predictor variable for the study was no. of employees in each establishment.
Each establishment in the sample was visited, and a great deal of information regarding
copying habits was recorded. A key item of information for the study was the average no.
of copies an establishment makes in a day. The variable is called Copy Volume. Xerox
management believed that the copy volume of establishments tends to increase as the
number of employees increases. They also believed that the copying habits of
establishments depend somewhat on the type of establishment. That is the type of
industry it belongs to. For example - Colleges and Universities, Banks,
Manufacturing etc. In this case, we examine the data pertaining to banking
establishments.
Market planning department actually wanted to estimate the total copy volume of banks
with 30 employees. 30 was one of the several bench mark figures in their planning
process. They knew from the industry data base that there were 800 banking
establishments that had approximately 30 employees. So they needed to estimate the
average copy volume for these establishments.
Further the sales organization wanted a model to predict the copy volume of individual
banks, given the no. of employees. Sales representatives could use this prediction in
preparing their presentations for initial sales calls with regard to the size of the copier
appropriate for a customer.
The data collected by the market planning department is given as follows.
Employees
Copy volume
(Daily)

8
80

9
130

10
150

28
560

29
460

29
600

30
520

30
650

48
860

48
900

49
850

(1) Determine the strength of the linear relationship between No. of Employees and
Daily copy Volume.
(2) Develop a model for Xerox Corporation to predict the average daily copy volume
for a given no. of employees.
(3) Estimate the average daily copy volume for small banking establishments with 30
employees.
(4) With proper justification, Comment on the explanatory power of your linear
regression model.

50
990