Question

A Sales Manager at WATWIUC Stores collected data on annual sales (in thousand Ghana Cedis)
and years of experience of 30 sales persons. He wants to explore the relationship between years
of experience and annual sales.
a) Which variable is the dependent variable in this study?
b) Which variable is the independent variable in this study?
c) The coefficient of correlation between the dependent variable and the independent
variable was found to be 0.9, meaning that the dependent and the independent variables
are strongly positively related. As CEO of the WATWIUC stores what would you
recommend with respect to the independent variable? Be specific.
d) What is the value of the coefficient of determination in this study?
e) Interpret in the context of this study the meaning of the value of the coefficient of determination you found in d)
f) The Sales Manager in his study developed an estimated regression equation that can be used to predict annual sales given the years of experience. The estimated regression
equation is Y= 18+2X where Y is the dependent variable and X is the independent variable. Explain to someone who is not familiar with statistics or mathematics the meaning of 18 (value of the intercept or constant) in the context of this study.
g) Based on the linear equation in f) predict the value of the dependent variable if the value of the independent is 1

Answer 1

a) the dependent variable is annual sales

b) the independent variable is year of experience

c) the coefficient of correlation is 0.9 this means there is strong positive correlation between annual sales and years of experience . this means the more experienced sales man give more annual sales as compared to less experienced sales man

d) the value of coefficient of determination is given by

e) this means that 81% of the total variation is explained by predicted regression equation

f) the given regression equation is

here Y is dependent variable and X is independent variable

so the intercept term

this means that if a sales man has no experience then also he will be able to generate sales of 18 thousand ghana cedis

g)

if

then

Y=20 thousand ghana cedis