Regression Analysis
- 1. Regression Analysis Steve OlshefskiKaylie Petro
- 2. Background Sunflower Clothing company is looking to expand and open new locationTriangle Mall wants Sunflower to rent a locationSunflower usually decides based on square footageTriangle Mall attempts to use average disposable income instead vs. square footage
- 3. Data…Y variable (dependent) what Triangle Mall is trying to explainAnnual SalesX variable (independent) what the Annual Sales is based off ofAverage Disposable Income
- 4. SamplesTriangle Mall was given 14 samples of current stores, the average disposable income in the area, and the amount of sales that were madeTriangle mall took that information and put it into a scatter plot to show the strong positive relationship between the two to convince Sunflower their location would be a good choice due to the high disposable income in the area
- 5. Scatter Plot
- 6. Scatter Plot AnalysisGraph shows that there is a positive relationship between the number of sales that are made based on the average disposable income in the area
- 7. Hypothesis Null: B1(slope) = 0No relationship, X variable (annual sales) is not significantAlternative B1(slope) < > 0There is a relationship and the X variable is significant
- 8. Data CalculationsR Squared = 48%48% of variability is explained by the disposable incomeIntercept = - 1.94Slope = 0.193P value = 0.0005Correlation Coefficient 0.698
- 9. Hypothesis AnalysisP value vs. Alpha (0.05)0.0005 vs. 0.05Reject the Null since Alpha is > P ValueRejecting the Null shows there is a relationship between the x and y variable and that x is significant to the test
- 10. Intercept and Slope AnalysisTriangle Mall says they will do no less than 10.6 million dollars in sales since the disposable income in the area is no less than $65,000This 10.6 million dollars was found by using the intercept (-1.94) and the slope (0.193)1.94/0.193
- 11. ConclusionSunflower Clothing Company should take the offer from the Triangle MallAlthough it is not as large as their other locations, they will do just as well and in some situations even better than the larger stores.