Question

Solve the following question.

1. The following is the 8 week sales data for a Kashmiri tea house comprising the number of customers (in hundreds) and weekly sales (in thousand SRs).

No of Customers	15	9	40	20	25	25	15	35
Weekly Sales	06	04	16	06	13	09	10	16

1. Find the simple linear regression equation of weekly sales over number of customers.
2. What will be sales of ninth week given that the average number of customers is 30?

Answer 1

We should build simple linear regression model by considering "Weekly sales" as dependent variable and "Number of customers" as independent variable.

I have to used R code to solve this question.

GIVEN:

The 8 week sales data for a Kashmiri tea house comprising the number of customers (in hundreds) and weekly sales (in thousand SRs).

R CODE:

#SIMPLE LINEAR REGRESSION MODEL

Model=lm(Weekly_sales ~ No_of_customers, data=data)
summary(Model)

SIMPLE LINEAR REGRESSION MODEL OUTPUT:

(a) ESTIMATED REGRESSION EQUATION:

The estimated simple linear regression equation of weekly sales over number of customers is given by,

where

is the predicted dependent variable "weekly sales".

is the intercept.

is the slope coefficient of the independent variable "Number of customers".

is the independent variable "Number of customers".

(b) PREDICTED SALES OF NINTH WEEK GIVEN THAT AVERAGE NUMBER OF CUSTOMERS IS 30:

The estimated simple linear regression equation of weekly sales over number of customers is given by,

If the average number of customers is 30, the predicted sales of ninth week is given by,

Thus the predicted sales of ninth week if the average number of customers is 30 is (in thousand SRs).