Description
- Management proposed the following regression model to predict sales at a fast-food outlet. The following estimated regression equation was developed after 20 outlets were surveyed.
= 10.4 - 4.4x_{1} + 6.4x_{2} + 15.2x_{3}
a. What is the expected amount of sales attributable to the drive-up window?
$ ____________ in thousands
b. Predict sales for a store with two competitors, a population of 9,000 within one mile, and no drive-up window.
Estimate of sales = $ _________in thousands
c. Predict sales for a store with one competitor, a population of 3,000 within one mile, and a drive-up window.
Estimate of sales = $ _________in thousands
2. Use computer software packages, such as Minitab or Excel, to solve this problem.
The owner of Showtime Movie Theaters, Inc., would like to predict weekly gross revenue as a function of advertising expenditures. Historical data for a sample of eight weeks follow.
Weekly | Television | Newspaper |
Gross Revenue | Advertising | Advertising |
($1,000s) | ($1,000s) | ($1,000s) |
94 | 5.0 | 1.5 |
90 | 2.0 | 2.0 |
95 | 4.0 | 1.5 |
92 | 2.5 | 2.5 |
103 | 3.0 | 3.3 |
94 | 3.5 | 2.3 |
94 | 2.5 | 4.2 |
103 | 3.0 | 2.5 |
- Develop an estimated regression equation with the amount of television advertising as the independent variable (to 1 decimal).
- Revenue =_________+ _________ TVAdv
- Develop an estimated regression equation with both television advertising and newspaper advertising as the independent variables (to 2 decimals).
- Revenue =_________+_________TVAdv +_________NewsAdv
Explanation & Answer
See attached:)
Running head: REGRESSION
1
Regression
Name
Institution
Date
REGRESSION
Solution
Y= 10.4 - 4.4x1 + 6.4x2 + 15.2x3
Y =10.4+15.2(1) = $25.6
Y= 10.4 - 4.4x1 + 6.4x2 + 15.2x3
Number of competitors=2
Population =9000
Drive up= 0
Y= 10.4 - 4.4*2 + 6.4*9000 + 15.2*0
Estimated sales = $ 57,601.6
Y= 10.4 - 4.4x1 + 6.4x2 + 15.2x3
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