Question

The Tasty Sub Shop Case: A business entrepreneur uses simple linear regression analysis to predict the yearly revenue for a potential restaurant site on the basis of the number of residents living near the site. The entrepreneur then uses the prediction to assess the profitability of the potential restaurant site. And The QHIC Case: The marketing department at Quality Home Improvement Center (QHIC) uses simple linear regression analysis to predict home upkeep expenditure on the basis of home value. Predictions of home upkeep expenditures are used to help determine which homes should be sent advertising brochures promoting QHIC’s products and services.

Discuss the difference in the type of prediction in both cases and provide rational of the reasons that these predictions were used.

Be sure to respond to the following:

a) What are the dependent and independent values for each case?

b) What are the r values related to the regression. What do these values tell you?

c) Do the independent measures chosen have face validity?

Answer 1

There is some explanation based on the regression model generally used in the cases of prediction that is given below. The comparison between the QHIC and Tasty Shop cases is given after the explanation of the predictor and response variables in QHIC case and the regression models are given in the solution for both ths case studies separately.