Question

Create a scatter plot. What does it indicate?

What is the regression equation?

Is the equation significant? How do you know?

What is the estimate for Period 13?

What is the r2 and what does it signify?

Period	Sales
1	12
2	13
3	12
4	14
5	13
6	15
7	16
8	14
9	17
10	15
11	17
12	18

Answer 1

Scatter plot :

Scatter plot indicates that there is an upward trend and the Sales increase as the period increases.

Now, we estimate the regression equation as :

Now, we use Excel Data Analysis Tool Pack to find test for significance of the regression equation :

Null hypothesis : Regression is not significant

Alternate hypothesis : Regression is significant

Here, we assume Level of significance = 0.05

Decision criteria : If P-value < Level of significance, we reject null hypothesis , otherwise we do not reject.

Output :

Here, in the ANOVA Table we can see that :

Significance F = P-value = 0.000112827

Since, P-value = 0.000112827 < 0.05 ( Level of significance) , we reject null hypothesis and conclude that the regression equation is significant.

Now,

Estimate for Period 13 :

Now,

we consider R-square from the above output :

R² = 0.789218244 = 0.7892 = 78.92 %

Here, R² signifies the amount of variation explained by the model in estimating the Sales.

So, 78.92 % of the variation is being explained by the regression model in estimating the Sales.