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In: Statistics and Probability

Please find at least one application of a multiple linear regression model in business analysis and...

Please find at least one application of a multiple linear regression model in business analysis and post your comments/thoughts and the web link of the information source,

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Expert Solution

Regression analysis is a statistical technique which describe the relation between two or more variables. Let there are two variables, where one is independent and the other dependent, depending upon the independent variable and if the relation connecting them is linear, then it is called simple linear regression.

Assume there are more than two variables, where one of the variable is depending upon the other variables, where the relation is linear, then it is the case of multiple linear regression or simply multiple regression. For example, let us consider the variable denoting yielf from a farm as Y. Let the manure provided (X1), quality of seed used (X2), fertilizer used (X3) are some of the variables acting on Y. That is the value of Y is the after effect of all these variables X1, X2,X3 .

Let us find a relation for Y in terms of X1,X2 and X3 in the form,

Y= aX1+bX2+cX3 + e. This relation with the suitble values for the constants, a,b,c and e is known as the multiple linear regrssion equation of Y in terms of X1, X2 and X3.

In a business atmosphere,consider the demand for their product Y ( say the product is cosmetic) depending up on the factors like average annual income of the populaittion,(X1) the population size(X2), advertisement expense (X3)etc.

The firm can asses the demand for their product in future, for the known values of X1, X2, X3 etc, if they have a releation for Y in terms of X1, X2, X3 etc,

In this case it is to estimate such a relation. If the relation is decided to estimate in linear form, that is known as multiple linear regression equaiton for Y.

Web links:

https://study.com/academy/lesson/multiple-regression-analysis-in-business-uses-examples.html

http://www.unife.it/economia/lm.economics/lectures/statistics-for-economics-business/slides/lect-8_-mlrm

https://www.oreilly.com/library/view/data-mining-for/9780470526828/ch06.html


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