Assignment 18 (M23MSA044)

Verification of Assumption on Error

Assumption 1: The errors have mean zero and Variance

Verification:

Regression Statistics
0.875937
Multiple R 353
0.767266
R Square 247
0.763110 Calculated (for Residuals)
Adjusted R Square 287 Mean 1.02906E-14
19.68423 Standard Error 19.51080063
Standard Error 338
Observations 58

By comparing the above tables, we can see

the calculated mean error of residual is close advt Residual Plot
to zero and the standard error (from
80
regression analysis) is approx. same as
60
calculated standard error.
40
Residuals

Also, from the residual scatter plot we can 20

see points are scatter around zero. 0
-20 0.5 1 1.5 2 2.5 3 3.5 4
Thus, from above observation we can -40
conclude that assumption 1 i.e. The errors -60
have mean zero and Variance is satisfied. advt

Assumption 2: Error are normally distributed.

Verification: As we can see from the, that the errors are following a normal distribution.
Thus, we can conclude that
assumption 2 i.e. Errors are normally Normal Probability Plot
distributed.
250

200

150

sales
100

50

Assumption 3: Errors are 0

independent. 0 20 40 Residuals
60 80 100 120

12 Sample Percentile
Verification: The scatterplot of
residuals exhibits a random scatter 10
and show no clear pattern or trend over 8
time. 6
Thus, satisfying that the errors are 4
independent. 2

0
0 2 4 6 8 10 12