## Description

Wal-Mart is the second largest retailer in the world. The data file (WalMart_revenue.xlsx) is included in the Excel data zip file in week one, and it holds monthly data on Wal-Mart’s revenue, along with several possibly related economic variables.

- Develop a linear regression model to predict Wal-Mart revenue, using CPI as the only independent variable.
- Develop a linear regression model to predict Wal-Mart revenue, using Personal Consumption as the only independent variable.
- Develop a linear regression model to predict Wal-Mart revenue, using Retail Sales Index as the only independent variable.
- Which of these three models is the best? Use R-square value, Significance F values and other appropriate criteria to explain your answer

Identify and remove the four cases corresponding to December revenue.

- Develop a linear regression model to predict Wal-Mart revenue, using CPI as the only independent variable.
- Develop a linear regression model to predict Wal-Mart revenue, using Personal Consumption as the only independent variable.
- Develop a linear regression model to predict Wal-Mart revenue, using Retail Sales Index as the only independent variable.
- Which of these three models is the best? Use R-square values and Significance F values to explain your answer.
- Comparing the results of parts (d) and (h), which of these two models is better? Use R-square values, Significance F values and other appropriate criteria to explain your answer.

Please use one Excel file to complete this problem, and use one sheet for one sub-problem. Use a Microsoft Word document to answer questions.

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## Explanation & Answer

Here is my answer :)

Date

11/28/2003

12/30/2003

1/30/2004

2/27/2004

3/31/2004

4/29/2004

5/28/2004

6/30/2004

7/27/2004

8/27/2004

9/30/2004

10/29/2004

11/29/2004

12/31/2004

1/21/2005

2/24/2005

3/30/2005

4/29/2005

5/25/2005

6/28/2005

7/28/2005

8/26/2005

9/30/2005

10/31/2005

11/28/2005

12/30/2005

1/27/2006

2/23/2006

3/31/2006

4/28/2006

5/25/2006

6/30/2006

7/28/2006

8/29/2006

9/28/2006

10/20/2006

11/24/2006

12/29/2006

1/26/2007

Wal Mart Revenue

14.764

23.106

12.131

13.628

16.722

13.98

14.388

18.111

13.764

14.296

17.169

13.915

15.739

26.177

13.17

15.139

18.683

14.829

15.697

20.23

15.26

15.709

18.618

15.397

17.384

27.92

14.555

18.684

16.639

20.17

16.901

21.47

16.542

16.98

20.091

16.583

18.761

28.795

20.473

CPI

552.7

552.1

554.9

557.9

561.5

563.2

566.4

568.2

567.5

567.6

568.7

571.9

572.2

570.1

571.2

574.5

579

582.9

582.4

582.6

585.2

588.2

595.4

596.7

592

589.4

593.9

595.2

598.6

603.5

606.5

607.8

609.6

610.9

607.9

604.6

603.6

604.5

606.348

Personal Consumption

7868495

7885264

7977730

8005878

8070480

8086579

8196516

8161271

8235349

8246121

8313670

8371605

8410820

8462026

8469443

8520687

8568959

8654352

8644646

8724753

8833907

8825450

8882536

8911627

8916377

8955472

9034368

9079246

9123848

9175181

9238576

9270505

9338876

9352650

9348494

9376027

9410758

9478531

9540335

Retail Sales Index December

301337

0

357704

1

281463

0

282445

0

319107

0

315278

0

328499

0

321151

0

328025

0

326280

0

313444

0

319639

0

324067

0

386918

1

293027

0

294892

0

338969

0

335626

0

345400

0

351068

0

351887

0

355897

0

333652

0

336662

0

344441

0

406510

1

322222

0

318184

0

366989

0

357334

0

380085

0

373279

0

368611

0

382600

0

352686

0

354740

0

363468

0

424946

1

332797

0

281463

424946

Date

11/28/2003

1/30/2004

2/27/2004

3/31/2004

4/29/2004

5/28/2004

6/30/2004

7/27/2004

8/27/2004

9/30/2004

10/29/2004

11/29/2004

1/21/2005

2/24/2005

3/30/2005

4/29/2005

5/25/2005

6/28/2005

7/28/2005

8/26/2005

9/30/2005

10/31/2005

11/28/2005

1/27/2006

2/23/2006

3/31/2006

4/28/2006

5/25/2006

6/30/2006

7/28/2006

8/29/2006

9/28/2006

10/20/2006

11/24/2006

1/26/2007

Wal Mart Revenue

14.764

12.131

13.628

16.722

13.98

14.388

18.111

13.764

14.296

17.169

13.915

15.739

13.17

15.139

18.683

14.829

15.697

20.23

15.26

15.709

18.618

15.397

17.384

14.555

18.684

16.639

20.17

16.901

21.47

16.542

16.98

20.091

16.583

18.761

20.473

CPI

552.7

554.9

557.9

561.5

563.2

566.4

568.2

567.5

567.6

568.7

571.9

572.2

571.2

574.5

579

582.9

582.4

582.6

585.2

588.2

595.4

596.7

592

593.9

595.2

598.6

603.5

606.5

607.8

609.6

610.9

607.9

604.6

603.6

606.348

Personal Consumption

7868495

7977730

8005878

8070480

8086579

8196516

8161271

8235349

8246121

8313670

8371605

8410820

8469443

8520687

8568959

8654352

8644646

8724753

8833907

8825450

8882536

8911627

8916377

9034368

9079246

9123848

9175181

9238576

9270505

9338876

9352650

9348494

9376027

9410758

9540335

Retail Sales Index December

301337

0

281463

0

282445

0

319107

0

315278

0

328499

0

321151

0

328025

0

326280

0

313444

0

319639

0

324067

0

293027

0

294892

0

338969

0

335626

0

345400

0

351068

0

351887

0

355897

0

333652

0

336662

0

344441

0

322222

0

318184

0

366989

0

357334

0

380085

0

373279

0

368611

0

382600

0

352686

0

354740

0

363468

0

332797

0

SUMMARY OUTPUT

Regression Statistics

Multiple R

0.33715206

R Square

0.11367151

Adjusted R Square

0.08971669

Standard Error

3.68940061

Observations

39

ANOVA

df

Regression

Residual

Total

Intercept

CPI

1

37

38

Coefficients

-24.4085438

0.07179155

SS

64.59074523

503.6320451

568.2227904

MS

64.5907452

13.6116769

F

4.74524526

Significance F

0.035825565

Standard Error

t Stat

19.24848215 -1.26807629

0.032956721 2.17835839

P-value

0.21269225

0.03582556

Lower 95%

-63.40967322

0.00501489

Wal Mart Revenue vs CPI (Scatterplot)

35

Wal Mart Revenue

30

y = 0.0718x - 24.409

R² = 0.1137

25

20

15

10

5

0

540

550

560

570

580

CPI

Upper 95%

14.5925857

0.13856821

590

600

610

610

620

SUMMARY OUTPUT

Regression Statistics

Multiple R

0.39402403

R Square

0.15525494

Adjusted R Square

0.13242399

Standard Error

3.6018141

Observations

39

ANOVA

df

Regression

Residual

Total

Intercept

Personal Consumption

SS

88.21939269

480.0033977

568.2227904

MS

F

88.2193927 6.80019672

12.9730648

Significance F

0.013066699

Coefficients Standard Error

-8.8950748

10.13900841

3.0282E-06

1.16123E-06

t Stat

P-value

-0.8773121 0.38597828

2.60771868

0.0130667

Lower 95%

-29.43865722

6.75287E-07

1

37

38

Wal Mart Revenue vs Personal Consumption

(Scatterplot)

Wal Mart Revenue

35

30

y = 3E-06x - 8.8951

R² = 0.1553

25

20

15

10

5

0

7000000

7500000

8000000

8500000

9000000

Personal Consumption

Upper 95%

11.6485076

5.381E-06

9500000

sumption

9500000

10000000

SUMMARY OUTPUT

Regression Statistics

Multiple R

0.7574074

R Square

0.57366597

Adjusted R Square

0.56214343

Standard Error

2.55878303

Observations

39

ANOVA

df

Regression

Residual

Total

Intercept

Retail Sales Index

1

37

38

Coefficients

-13.8039676

9.1859E-05

SS

MS

F

Significance F

325.970078 325.970078 49.7864101

2.38791E-08

242.2527123

6.5473706

568.2227904

Standard Error

t Stat

4.455669125 -3.09806837

1.30186E-05 7.05594856

P-value

0.00370835

2.3879E-08

Lower 95%

-22.83201079

6.54805E-05

Wal Mart Revenue vs Retail Sales Index

(Scatterplot)

Wal Mart Revenue

35

30

y = 9E-05x - 13.804

R² = 0.5737

25

20

15

10

5

0

250000 270000 290000 310000 330000 350000 370000 390000 410000 430000

Retail Sales Index

Upper 95%

-4.77592439

0.00011824

430000 45000...