QUESTION 2 (CLO2: Developing Regression analysis

a. A simple regression model with paint sales (Y) as the dependent variable selling
price (P) as the independent variable.

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.8661797
R Square 0.750267273
Adjusted R Square 0.719050682
Standard Error 16.43239213
Observations 10

ANOVA
df SS MS F Significance
F
Regression 1 6489.812 6489.81 24.03425 0.001190045
2
Residual 8 2160.188 270.023
5
Total 9 8650

Coefficients Standard t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Error
A 390.376176 44.238 8.8244 2.1415E-05 288.3622535 492.3900976 288.3622535 492.3900976

B -14.2633 2.9094 -4.902 0.00119005 -20.9724424 -7.55420334 -20.9724424 -7.55420334

RESIDUAL OUTPUT

Observation Predicted Y Residuals Standard Residuals

1 176.4263 -16.4263 -1.06027
2 197.8213 22.17868 1.431566
3 155.0313 -15.0313 -0.97023
4 183.558 6.442006 0.415812
5 147.8997 -17.8997 -1.15537
6 162.163 -2.16301 -0.13962
7 204.953 -4.95298 -0.3197
8 133.6364 16.36364 1.056222
9 219.2163 -9.2163 -0.59488
10 169.2947 20.70533 1.336465
 Regression of Y to X1
20
15 f(x) = − 0.0526011560693642 x + 24.3052023121387
R² = 0.750267273089677
10
5
0
120 140 160 180 200 220 240

 a. is the intercept: 390.376176

 b. is the slope: -14.2633
 observation: 10

b. the estimated regression equation

Formula: Y=a+bx
Y = 390.37 + (-14.2633x)

c. Economic interpretation of the estimated intercept (a) and slope (b) coefficient.

There are two variables those are dependent and independent variables, one is selling price (X),
and another one is sales (Y). The selling price “X” is independent variable and the Sale “Y” is
dependent variable

The Regression analyses model appear to us above, both explain to us the variables, and there is
10 observations. After analysis, according to regression analysis table, R 2 is equal 0.75 and this
explains that there is strong relationship between Selling price “X” and Sale Revenue “Y”, and
when we see F-statistics “0.001” explains or indicates that Selling price is significant relationship
to the sales revenue.

Therefore, there is a strong relationship between selling price and sales revenue however;
marketing managers should be more focused on selling prices and satisfying customers to pursue
business goals.

d. Coefficient of determination
Formula: Coefficient of Determination (R2) = (TSS – RSS) / TSS
R2 = 0.750267273 or 75% is the coefficient of determination
e. A multiple regression model with paint sales (Y) as the dependent variable and
promotional expenditures (A) and selling price (P) as the independent variables.
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.898462
R Square 0.807235
Adjusted R Square 0.74298
Standard Error 16.42777
Observations 9
 ANOVA

df SS MS F Significance
F
Regression 2 6780.771 3390.386 12.56296 0.007163

Residual 6 1619.229 269.8715

Total 8 8400

Coefficients Standard t Stat P-value Lower Upper Lower Upper

Error 95% 95% 95.0% 95.0%
Intercept 327.5627 82.25679 3.982197 0.007265 126.2876 528.8378 126.2876 528.8378
150 0.153566 0.162487 0.945094 0.381097 -0.24403 0.551157 -0.24403 0.551157
15 -11.2278 4.378516 -2.5643 0.042661 -21.9417 -0.514 -21.9417 -0.514

RESIDUAL OUTPUT

Observation Predicted 160 Residuals Standard Residuals

1 200.5573 19.44266 1.366616448
2 149.9816 -9.98159 -0.701601817
3 193.9365 -3.93646 -0.27669209
4 150.5103 -20.5103 -1.441659713
5 157.1312 2.86883 0.201648825
6 203.0999 -3.09995 -0.217893823
7 142.3538 7.646237 0.537450664
8 223.5417 -13.5417 -0.951841875
9 168.8877 21.11229 1.483973381

Multible Regression for Y to X1 and X2

300 20
200 15
f(x) = 0.727532550015878 x
10
100 R² = 0.92547311054213 5
0 0
120 140 160 180 200 220 240
Series2 Linear (Series2) Series4
  a. is the intercept: 327.5627
 b. is the slope: 0.153566 for X1, -11.2278X2
 observations: 9 (N-k) k=1 (10-1)= 9

i. Estimated regression equation

Formula: Y=a+bx1+x2+E (error)
Y = 327.5627+ 0.153566X1+11.2278X2+E

ii. Economic interpretation of the estimated slope coefficients.

There are three variables those are one is dependent variable and the other two variables are
independent variables, one is selling price for x1 and Promotion expense for X2, and the
dependent variable is sales (y). The selling price and Promotion expense are independent
variables.

The above Table and Regression analyses model indicates the variables, and there is 10
observations. After analysis, according to regression analysis table, R 2 is equal 0.80 and this
explains that there is strong relationship between Selling price and Promotion expense and Sale
Revenue “Y”, and when we see F-statistics and the P-value of the whole regression “0.007265” ,
0.007265 respectively explains or indicate that Selling price and promotion expense are
significant relationship to the sale revenue.

On the other hand, the p-value of the selling price is “0.381097” and this issue tells us that is
promotion expense is non- significant to the sales revenue and the marketing manager should
improve the marketing relationship to enhance their selling price.

In conclusion, there is a strong relationship between selling price, promotion expense and sales
revenue however; but in separately the promotion expense is non-significant to the sales revenue,
marketing managers should be more focused on selling prices improvement and satisfying
customers to pursue business goals.

iii. Coefficient of determination

Formula: Coefficient of Determination (R2) = (TSS – RSS) / TSS
R2 = 0.807235 or 80.7% is the coefficient of determination