REGRESSION AND CORRELATION ANALYSIS

1) A company’s past records contain the following data relating to sales revenue and expenditure
on advertisements for six years as follows

Year Sales Revenue Advertising Expenditure

(Rs crores) (Rs Crores)
200 125 15
1
200 132 16
2
200 145 20
3
200 150 21
4
200 160 23
5
200 170 25
6
(i) Calculate correlation and appropriate regression equation and estimate the sales
in the next year when the advertisement expenses are budgeted as Rs 30 crores.
(ii) Also create a secondary plot to observe correlation.
(iii) Obtain descriptive statistics for above data.

2) The following data gives the I.Q. and marks in Statistics of 6 students

I.Q. 100 130 110 125 115 120

Marks 70 90 70 83 76 75
(a) Find regression equation of marks on I.Q.
(b) Estimate the marks of a student whose I.Q is 120
(c) Find correlation coefficient between I.Q. and marks.

3) The owner of a departmental store would like to estimate monthly gross revenues as a
function of advertising. Historical data for randomly selected 8 months is given below
Monthly Revenue Television Advertising Newspaper Advertising
105 5 3.5
100 4 2
95 2 1.5
98 2.5 2.5
102 3 3.3
100 3.5 2.3
98 2.5 4.2
95 3 2.5
(a) Derive the regression equation with the amount of expenditure on television
advertising as the independent variable.
(b) Derive the regression equation with both expenditures on television advertising and
newspaper advertising as the independent variable.
(c) Estimate the monthly gross revenue for a month when 4 crores is spent on TV and
1.5 crores is spent on newspaper advertising.
(d) Which advertising expenditure has strong correlation with monthly revenue?
(e) Obtain summary statistics for monthly revenue.
(f) Plot graphically to check correlation.