456

CHAPTER 14

CHAPTER EXERCISES
11. A multiple regression analysis yields the following partial results.

Source Sum of Squares df

Regression 750  4
Error 500 35

a. What is the total sample size?

b. How many independent variables are being considered?
c. Compute the coefficient of determination.
d. Compute the standard error of estimate.
e.
Test the hypothesis that at least one of the regression coefficients is not equal to
zero. Let α = .05.
2. In a multiple regression analysis, two independent variables are considered, and the
1
sample size is 25. The regression coefficients and the standard errors are as follows.
b1 = 2.676 sb1 = 0.56
b2 = −0.880 sb2 = 0.71
Conduct a test of hypothesis to determine whether either independent variable has a
coefficient equal to zero. Would you consider deleting either variable from the regres-
sion equation? Use the .05 significance level.
13. The following output is from a multiple regression analysis.

a. What is the sample size?

b. Compute the value of R2.
c. Compute the multiple standard error of estimate.
d. Conduct a global test of hypothesis to determine whether any of the regression
­coefficients are significant. Use the .05 significance level.
e. Test the regression coefficients individually. Would you consider omitting any vari-
able(s)? If so, which one(s)? Use the .05 significance level.
14. In a multiple regression analysis, k = 5 and n = 20, the MSE value is 5.10, and SS total
is 519.68. At the .05 significance level, can we conclude that any of the regression
­coefficients are not equal to 0?
5. The district manager of Jasons, a large discount electronics chain, is investigating why
1
certain stores in her region are performing better than others. She believes that three
factors are related to total sales: the number of competitors in the region, the population
in the surrounding area, and the amount spent on advertising. From her district consist-
ing of several hundred stores, she selects a random sample of 30 stores. For each store,
she gathered the following information.
y = total sales last year (in $ thousands)
x1 = number of competitors in the region
x2 = population of the region (in millions)
x3 = advertising expense (in $ thousands)

MULTIPLE REGRESSION ANALYSIS 457

The results of a multiple regression analysis, using Minitab, follow.

a. What are the estimated sales for the Bryne store, which has four competitors, a
­regional population of 0.4 (400,000), and an advertising expense of 30 ($30,000)?
b. Compute the R2 value.
c. Compute the multiple standard error of estimate.
d. Conduct a global test of hypothesis to determine whether any of the regression
­coefficients are not equal to zero. Use the .05 level of significance.
e. Conduct tests of hypothesis to determine which of the independent variables have
significant regression coefficients. Which variables would you consider eliminating?
Use the .05 significance level.
16. The sales manager of a large automotive parts distributor wants to estimate the total
annual sales for each of the company’s regions. Five factors appear to be related to
regional sales: the number of retail outlets in the region, the number of automobiles in
the region registered as of April 1, the total personal income recorded in the first quar-
ter of the year, the average age of the automobiles (years), and the number of sales
supervisors in the region. The data for each region were gathered for last year. For
example, see the following table. In region 1 there were 1,739 retail outlets stocking
the company’s automotive parts, there were 9,270,000 registered automobiles in the
region as of April 1, and so on. The region’s sales for that year were $37,702,000.

Number of Average
Annual Number of Automobiles Personal Age of
Sales Retail Registered Income Automobiles Number of
($ millions), Outlets, (millions), ($ billions), (years), Supervisors,
y x1 x2 x3 x4 x5
37.702 1,739 9.27 85.4 3.5 9.0
24.196 1,221 5.86 60.7 5.0 5.0
32.055 1,846 8.81 68.1 4.4 7.0
  3.611 120 3.81 20.2 4.0 5.0
17.625 1,096 10.31 33.8 3.5 7.0
45.919 2,290 11.62 95.1 4.1 13.0
29.600 1,687 8.96 69.3 4.1 15.0
  8.114 241 6.28 16.3 5.9 11.0
20.116 649 7.77 34.9 5.5 16.0
12.994 1,427 10.92 15.1 4.1 10.0

a. Consider the following correlation matrix. Which single variable has the stron-
gest  correlation with the dependent variable? The correlations between the
­independent variables outlets and income and between outlets and number of
automobiles are fairly strong. Could this be a problem? What is this condition
called?