Assignment 1 Regression

Name Tasneem Kareem Saud Manish Azhar Roll no 106 103 61 50 24

Question 1 Following is the Data for monthly electrical usage for various home sizes:
Home_Size 1,710 1,290 2,930 2,230 1,840 2,400 1,980 1,470 1,600 1,350 Monthly_Usage 1,571 1,182 1,954 1,840 1,711 1,956 1,804 1,264 1,493 1,172

Variables:
The dependent variable in this example is the electrical power usage, Y. The independent variable is the home size, X. -Electrical Power Usage, Y (Kilowatt-hours) -Home Size, X (Square feet) 1a) Draw a Scatter plot (using SPSS). Interpret the scatter plot and explain the relationship between the dependent & the independent variable. (4 marks)

As the home size(independent variable ) increases the electric power usage (dependent variable) increases

1b) Run a regression model and interpret the regression results.

(3 marks)

Model Summary Adjusted R Model 1 a. R .912

a

Std. Error of the Estimate

R Square .832

Square .811

133.438

Predictors: (Constant), Home Size, X (Square feet)

Coefficients

Standardized Unstandardized Coefficients Model 1 (Constant) Home Size, X (Square feet) B 578.928 .540 Std. Error 166.968 .086 .912 Coefficients Beta t 3.467 6.288 Sig. .008 .000

a. Dependent Variable: Electrical Power Usage, Y (Kilowatt-hours)

The r value is above 0.7 which means that the model can be used for prediction of the electric usage based on the home size 1c) What strategies can company formulate based on the regression results. Motivate your answer with explanation. (3 marks) The company should target people having bigger homes in terms of square feet. They can run more promotions in areas having bigger homes and may provide discount offers for people having bigger homes. The reason for the above is that the significance level shown by regression table is 100% i.e. the home size directly impact the energy usage.

Question 2 Refer to the Excel Sheet (Big Bazaar.doc) for the chains database and consider the focal brand Nivea for this question Data description: For the supermarket brand "Big Bazaar" 124 weekly data points of one outlet are available (running from week 46 in 2003 until week 12 in 2006). For each brand / formula combination we have data on: Sales (stock-keeping units); Prices (Rs per l00 ml) (as observed); Regular price (Rs per 100 ml) (proxy for the price as if there were no discounts); Variable for feature-only: weighted distribution figure at the chain level for a feature-only (no display) in a certain week. A feature-only means special out-of-store attention for the brand, either in the store flier or in an ad in a newspaper or a magazine. Variable for display-only: weighted distribution figure for display-only (no feature) in a certain week. A display-only means special in-store attention for a brand: a temporary shelf or box with products in one of the aisles, or attention around the brand's regular shelf.

Question 1 Develop a regression model (Additive or Multiplicative) to predict the Sales of the focal brand Nivea and describe each parameter / term of the model. Motivate why you used this type of the model. (3 marks)

Model Summary Adjusted R Model 1 R .870

a

Std. Error of the Estimate

R Square .756

Square .748

829.1785666

a. Predictors: (Constant), NIVEAFEAT, NIVEADISP, NIVEARPrice (Rs), NIVEAPrice (Rs)

Coefficients

Standardized Unstandardized Coefficients Model 1 (Constant) NIVEAPrice (Rs) NIVEARPrice (Rs) NIVEADISP NIVEAFEAT B 6147.683 -7.277 -14.598 7868.324 10902.201 Std. Error 819.284 6.189 4.183 972.397 1393.046 -.102 -.274 .493 .403 Coefficients Beta t 7.504 -1.176 -3.490 8.092 7.826 Sig. .000 .242 .001 .000 .000

a. Dependent Variable: NIVEASales (Rs)

Question 2 Interpret the regression output. (4 marks)

The discounted price does not have effect on the sales of nivea. The regular price, displays and features have significant impact on the sales. Using the regression model I would recommend the company to have more displays and features.

Question 3 For the following value of coefficients, calculate the Sales for Nivea (3 marks)

(Nivea Regular price = Rs 192.11, Nivea Display = 0.0568548, Nivea Feature = 0.02669355)

Sales= 0.102 * 192.11 + 0. .493 * 0.0568548 + 0.403 * 0.02669355 =19.63