Question

The owners of a chain of ice cream stores have the business objective of improving the forecast of daily sales so that staffing shortages can be minimized during the summer season. As a starting point, the owners decide to develop a simple linear regression model to predict daily sales based on atmospheric temperature. They select a sample of 21 consecutive days and store the results in the Excel file.

Answer the following questions:

a. In this case, which variable is the independent variable and which variable is dependent variable?

b. Assuming a linear relationship, compute the regression coefficients;

c. Predict the sales for a day in which the temperature is 83F.

d. Is there a reason to question the validity of the model? Specifically, perform:

1). Check linearity between two variables by using plot and a formal test;

2). Check whether the Error is independent by using plot and a formal test;

3). Check whether the error is normal.

4). Check whether the model has equal variance.

e. What conclusions can you reach concerning the relationship between sales and atmospheric temperature?

Temperature	Sales
63	1.52
70	1.68
73	1.80
75	2.05
80	2.36
82	2.25
85	2.68
88	2.90
90	3.14
91	3.06
92	3.24
75	1.92
98	3.40
100	3.28
92	3.17
87	2.83
84	2.58
88	2.86
80	2.26
82	2.14
76	1.98

Answer 1