Regression

Correlation
Determination
Least Square/ Linear Regressio

Correlation
Relationship between two varia
Indpendent Variable - X
Dependent Variable - Y
Commodity Prices & Petroleum R
PR = Independent, CP = Depend
Advertising Exepnse & Sales Rev
AE = Independent, SR = Depend
Kibour Rate and Landing Rat
KR = Independent, LR = Depend
Positive Correlation - Perfect,Partia
Negative Correlation - Perfect,Partia
Correlation = r

Negative

-1

Kitkat - Winter & Valentine Acti

Activity Budget
Oct-16 150000
Nov-16 200000
Dec-16 220000
Jan-17 230000
Feb-17 450000
Mar-17 460000

Independent Variable - AB -
Dependent Variable - SR - Y
 X
Oct-16 150
Nov-16 200
Dec-16 220
Jan-17 230
Feb-17 450
Mar-17 460
1710

nExy 92981108.88
ExEy 88757579.07
nEx2 3467400
(Ex)2 2924100
nEy2 2734989682.98
(Ey)2 2694130789.77

Determina
Determinati
80%

80% of the variation in sales revenue is explained by var

due to other fact

Reason

Least Square Method/Linea

Y =a + b
Y = Dependent
a = Y Inter
b = slope or g
x = Independen
On the basis of past data
 Independent Varia
Dependent Varia
Forecast the total cost fo

MONTH
JAN
FEB
MAR
APR
MAY
JUN

b=

b=

a=

Y=
 Regression
Correlation
Determination
Least Square/ Linear Regression

Correlation
Relationship between two variables
Indpendent Variable - X
Dependent Variable - Y
Commodity Prices & Petroleum Rates
PR = Independent, CP = Dependent
Advertising Exepnse & Sales Revenue
AE = Independent, SR = Dependent
Kibour Rate and Landing Rate
KR = Independent, LR = Dependent
Positive Correlation - Perfect,Partial, Weak
Negative Correlation - Perfect,Partial, Weak
Correlation = r

ative Positive

0 1

Kitkat - Winter & Valentine Activity

Sales Revenue
71257643
7457437
8635952
8963256
9735852
9986756

Independent Variable - AB - X
Dependent Variable - SR - Y
 Y XY X2 Y2
7125.764 1068864.6 22500 50776512.584
7457.437 1491487.4 40000 55613366.609
8635.952 1899909.44 48400 74579666.946
8963.256 2061548.88 52900 80339958.122
9735.852 4381133.4 202500 94786814.166
9986.756 4593907.76 211600 99735295.404
51905.017 15496851.48 577900 455831613.83

NxExy-ExEy
4223529.81 nex2-ex2 X ney2-ey2
r=
543300 40858893 2924100

4223529.81
r=
22198636680656.5

r= 0.896 Perfect Postive Correlation

Determination
Determination = r2
80%

tion in sales revenue is explained by variation in activty budget and rest of 20% variation is
due to other factors(PESTLE).

Reason?

Least Square Method/Linear Regression Method

Y =a + bx
Y = Dependent Variable
a = Y Intercept
b = slope or gradiant
x = Independent Variable
On the basis of past data, we forecast future

MONTH UNTIS (000) COST $000

JAN 9.125 240
FEB 10.255 278
MAR 9.7 256
APR 10.5 258
MAY 11 290
JUN 11.5 300
 Independent Variable - Units - X
Dependent Variable - Cost - Y
Forecast the total cost for 12000 units in July

X Y XY X2
9.125 240 2190 83.265625
10.255 278 2850.89 105.165025
9.7 256 2483.2 94.09
10.5 258 2709 110.25
11 290 3190 121
11.5 300 3450 132.25
62.08 1622 16873.09 646.02065

544.780000000013 nXxy-xXy
22.1974999999998 nXx2-x2

24.54

16.40 (Ey/n)-a(ex/n)

310.91
 544.78
22.1975

24.542403

(Ey/n)-a(ex/n) 16.401266

310.91011
 Monday Tuesday
Numver of
32 45
visitors
Drinks sold 17 20

Days X Y
Monday 32 17
Tuesday 45 20
Wednesday 39 23
Thursday 43 7
Friday 58 24
Saturday 84 49
Sunday 65 38
sum 366 178

nExy 74340
ExEy 65148
nEx2 147448
(Ex)2 133956
nEy2 39816
(Ey)2 31684

The sales of a company (in million dollars) for each year are shown in the table below.
x (year) 2005 2006 2007 2008
y (sales) 12 19 29 37

a) Find the least square regression line y = a x + b.

b) Use the least squares regression line as a model to estimate the sales of the company in 201

UNITS 12000
Month X (Units) Y (cost) XY X2
jan 200 12000 2400000 40000
feb 350 15000 5250000 122500
March 500 17000 8500000 250000
Apr 650 20000 13000000 422500
May 700 25000 17500000 490000
2400 89000 46650000 1325000

19650000
865000 6625000 5760000
B 22.7167630057803 865000

A 6896

Y 279497
 Wednesday Thursday Friday Saturday Sunday

39 43 58 84 65

23 7 24 49 38

XY X2 Y2
544 1024 289
900 2025 400
897 1521 529
301 1849 49
1392 3364 576
4116 7056 2401
2470 4225 1444
10620 21064 5688

9192
13492 8132

9192
109716944

9192
10474.58562
0.877553 Perfect

shown in the table below.

2009
45

ate the sales of the company in 2012

 nXxy-xXy
nXx2-x2

(Ey/n)-b(ex/n)