Astrid Gabriela Hassan-2201925084

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FINAL EXAM LOB7

Question 1 (25 marks)

A real estate builder wishes to determine how house size (House) is influenced by family income (Income)
and family size (Size). House size is measured in meter square and income is measured in IDR millions. The
builder randomly selected 50 families and ran the multiple regression. Partial Microsoft Excel output is
provided below:

a. What is the population model of this regression problem?

Yi = b0 + b1X1i + b2X2i + b3X3i + …… +bkXki + ei

Y = -5.5146 + 0.4262x1 + 5.5437x2
where Y is house size, x1 is family income, x2 is family size
b. What is the sample estimates of the regression problem?
Regression (k) = 2
Residual = n – k -1 = 50 – 2 – 1 = 47
Sample (n) adalah 50
c. Which of the independent variables in the model are significant at the 5% level? Formulate the
hypothesis and explain the answer.
F test
H0: b=c=0 (there is no linear relationship between dependent variable and independent variables)
H1: ada 1 koefisien tidak sama dengan 0 (there is linear relationship between dependent variable an
independent variables.)
Fstat = MSR/MSE = 18521.6618/308.2503 = 60.08644

Df1 = 2
Df2 = 47
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FINAL EXAM LOB7

Critical value of F = 3.23

Fstat (60.08644) > Critical value of F (3.23) →reject H0

Nilai Sig F (0.00) < Nilai alpha (0.05) →reject H0

Conclusion: there is evidence that there is linear relationship between dependent variable dan
independent variables)

T test

Hipotesis untuk x1
Ho: b=0, x1 is not significance to impact Y
H1: b ≠ 0, x1 is significance to impact Y

T test for x1
p value = 0.00
alpha = 0.05
0.00 < 0.05 --> reject H0 (income is significance to impact house size)

Hipotesis untuk x2
Ho: c=0, x2 is not significance to impact Y
H1: c ≠ 0, x2 is significance to impact Y

T test for x2
p value = 0.002
alpha = 0.05
0.002 < 0.05 -->reject H0 (family size is significance to impact house size)

Kesimpulan:
There is evidence that income and family size are significance to impact house size at significance
level 5%. So, the independent variables that significance to impact house size is income and family
size.

d. How far can you rely upon this model? Or, what is the percentage variation in House explained by the
model?
Percentage variation in house size explained by variation in income dan family size → R2 = 71.89%

e. What is the predicted house size (in hundreds of square feet) for an individual earning an annual
income of IDR 400 million and having a family size of 4?

Y = -5.5146 + 0.4262x1 + 5.5437x2

X1 = 400

X2 = 4

Y = -5.5146 + 0.4262 (400) + 5.5437 (4) = 187.1402

 Astrid Gabriela Hassan-2201925084
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FINAL EXAM LOB7

Conclusion: For income 400 IDR Million and family size of 4, the house size is 187.1402 (in hundred of
square feet).

Question 2 (25 marks)

The CEO of Lucky Petroleum Co. has been considering to open a new gasoline station. He must decide
how large the station should be. The annual returns (IDR billions) will depend on both the size of the
station and market factor. After a careful analysis he developed the following table:

Market Probability Small Station Medium Station Large Station

Good 0.5 50 70 100
Fair 0.3 20 30 50
Poor 0.2 -10 -20 -30

a. Compute the expected value of each alternative size of station, and select the best decision.

EMV Small Station = 50 (0.5)+20(0.3) – 10(0.2) = 29

EMV Medium Station = 70 (0.5)+30(0.3) – 20(0.2) = 40

EMV Large Station = 100 (0.5)+50(0.3) – 30(0.2) = 59

Best decision: open large station to maximize the monetary value, because the EMV for large
station is the highest.

b. Construct the opportunity loss table and determine the best decision.

Opportunity Loss Table:

Optimum Optimum Alternatives
Action Profit Small Medium Large
Good Large 100 50 30 0
Fair Large 50 30 20 0
Poor Small -10 0 10 20

At good market, large station has optimum profit

At fair market, large station has optimum profit

At poor market, small station has optimum profit

At the good and fair market, CEO can open large station, and at the poor market, CEO can open
small station.
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FINAL EXAM LOB7

Best decision: open large station to gain optimum profit because the optimum profit in large
station is the highest.

c. Compute the expected value of perfect information.

EOL Large station = 0(0.5)+0(0.3)+ 20(0.2) = 4

EOL Medium station = 30(0.5)+20(0.3)+ 10(0.2) = 23

EOL Small station = 50(0.5)+30(0.3)+ 0(0.2) = 34

EVPI is 4, which the action that has the lowest/smallest EOL

Best decision: open large station because CEO just have to pay 4 IDR Billions to get perfect
information.

Question 3 (25 marks)

A new tropical fruit juice product was entering the marketplace. The director of marketing for the
company would like to know which advantage should be emphasized in advertisements, and which
advertisement is better for sales. Nine cities with similar demographics are chosen, and a different
combination of Media and Marketing Strategy is tried. The unit sales of tropical fruit juice for the eight
weeks are shown in the two-way table below.

At the 0.05 level of significance,

a. is there an interaction between media and marketing strategy?

H0: there is no interaction between media dan marketing strategy

H1: there is interaction between media dan marketing strategy

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FINAL EXAM LOB7

Two-Way ANOVA with replication

SUMMARY Convenience Quality Price Total

TV

Count 8 8 8 24
Sum 4223 4729 5215 14167
Average 527.875 591.125 651.875 590.2916667
Variance 5451.2679 9182.9821 4338.4107 9127.9088
Socmed

Count 8 8 8 24
Sum 4729 5560 4654 14943
Average 591.125 695 581.75 622.625
Variance 9182.9821 7624.8571 6772.2143 8811.9231
Newspaper

Count 8 8 8 24
Sum 5528 4642 5508 15678
Average 691 580.25 688.5 653.25
Variance 7111.7143 6213.9286 12575.4286 12315.1536
Total

Count 24 24 24
Sum 14480 14931 15377
Average 603.3333333 622.125 640.7083333
Variance 11323.8841 9798.0272 9255.6938
ANOVA

Source of Variation SS df MS F P-value F crit

Sample 47576.6944 2 23788.3472 3.1276 0.0507 3.1428

Columns 16762.8611 2 8381.4306 1.1020 0.3385 3.1428
Interaction 171931.7222 4 42982.9306 5.6512 0.0006 2.5177
Within 479176.5000 63 7605.9762
Total 715447.7778 71
Level of significance 0.05

Fstat = 5.6512

Critical value of F = 2.5177

Fstat > critical value → reject H0

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FINAL EXAM LOB7

p-value = 0.0006

alpha = 0.05

p-value < alpha → reject H0

Kesimpulan: there is evidence that there is interaction between media and marketing strategy

b. is there an effect due to media?

H0: there is no effect due to media on the new juice product

H1: there is effect due to media on the new juice product

p-value media = 0.0507

alpha = 0.05

p-value media > alpha →do not reject H0

Kesimpulan: there is no evidence that there is effect due to media on the new juice product

c. is there an effect due to marketing strategy?

H0: there is no effect due to marketing strategy on the new juice product

H1: there is effect due to marketing strategy on the new juice product

p-value media = 0.3385

alpha = 0.05

p-value media > alpha →do not reject H0

Kesimpulan: there is no evidence that there is effect due to marketing strategy on the new juice
product

Question 4 (25 marks)

A forestry official is comparing the causes of forest fires in three regions. The following table shows the
causes of fire for 100 randomly selected recent fires in these three regions.
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FINAL EXAM LOB7

Test at a 5% significance level whether causes of fire and regions of fires are related.

H0: there is no relationship between cause of fire dan region

H1: there is relationship between cause of fire dan region

Observed Frequencies
Column variable
Row variable Lightning Accident Arson Others Total
Region A 12 8 4 8 32
Region B 5 11 14 5 35
Region C 4 12 2 15 33
Total 21 31 20 28 100
Expected Frequencies
Column variable
Row variable Lightning Accident Arson Others Total
Region A 6.72 9.92 6.4 8.96 32
Region B 7.35 10.85 7 9.8 35
Region C 6.93 10.23 6.6 9.24 33
Total 21 31 20 28 100

Degree of freedom = 6

Alpha = 0.05

X2stat = 23.96925

Critical value = 12.59159

X2stat > critical value →reject H0

p-value < alpha = 0.000529 < 0.05 → reject H0

Kesimpulan: there is evidence that there is relationship between cause of fire dan region (related)