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1.1 Regression and Model Building
Regression analysis is a statistical
technique for investigating and modeling
the relationship between variables.
Equation of a straight line (classical)
y = mx +b
In statistics, we usually write this as
y =
0
+
1
x
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1.1 Regression and Model Building
Not all observations will fall exactly on a
straight line.
y =
0
+
1
x +
where represents error
- it is a random variable that accounts for the
failure of the model to fit the data exactly.
- We assume ~ N(0,
2
)
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1.1 Regression and Model Building
Delivery time example
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1.1 Regression and Model Building
Simple Linear Regression Model
where y dependent (response) variable
x independent (regressor/predictor) variable

0
- intercept

1
- slope
- random error term
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1.1 Regression and Model Building
The mean response at any value, x, of the
regressor variable is
The variance of y at any given x is
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Figure 1.3 Linear regression approximation of a
complex relationship.
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Figure 1.4 Piecewise linear approximation of a
complex relationship.
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Figure 1.5 The danger of extrapolation in regression.
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1.1 Regression and Model Building
Multiple Linear Regression Model
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1.2 Data Collection
Your analysis/model is only as good as the
data
Three different methods can be used for
data collection
1. A retrospective study based on historical data
2. An observational study
3. A designed experiment
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1.2 Data Collection
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Designed Experiment
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1.3 Uses of Regression
1. Data description
2. Parameter estimation
3. Prediction and estimation
4. Control
There are many uses of regression, including:
Regression analysis is perhaps the most
widely used statistical technique, and
probably the most widely misused.
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Cause and Effect Relationships
Caution: just because you can fit a linear
model to a set of data, does not mean you
should.
It is relatively easy to build nonsense
relationships between variables
Regression does not necessarily imply
causality
1.3 Uses of Regression
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Model building in regression