Question

Discussion Board My future profession is in business.

Another area of inferential statistics involves determining whether a relationship between two or more numerical or quantitative variables exist. For example, a business person may want to know whether the volume of sales for a given month is related to the amount of advertising the firm does that month. Educators are interested in determining whether the number of hours a student studies is related to the student's score on a particular exam. Medical researchers are interested in questions such as, Is caffeine related to heart damage? or Is there a relationship between a person's age and his or her blood pressure? As you study Linear Regression and Correlation, post an example where these statistical techniques can be used to best serve your current or future profession.

Answer 1

Correlation and regression analysis can be used on such data to identify relationships among these variables and interpret them in a way that can help managers make strategic business decisions

Uses in Business:

1. Predictive Analytics: Predictive analytics i.e. forecasting future opportunities and risks is the most prominent application of regression analysis in business

2. Operation Efficiency: Regression models can also be used to optimize business processes. For example, In a call center, we can analyze the relationship between wait times of callers and number of complaints.

3. Correcting Errors: Regression is not only great for lending empirical support to management decisions but also for identifying errors in judgement. For example, a retail store manager may believe that extending shopping hours will greatly increase sales. Regression analysis, however, may indicate that the increase in revenue might not be sufficient to support the rise in operating expenses due to longer working hours.

Performance Measure

Correlations in how production processes in a business currently operate can also lead to identifying efficiencies that save money. If patterns show that use of a particular material drives up costs of production, the correlation can lead managers to try and identify substitute supplies that lower manufacturing cost. The same goes for employee behaviour. If a business finds that employee performance picks up with the implementation of a bonus-pay-for-improvement system, the correlation of behaviour can signal that a small bonus expense can make serious production improvement.

Projection Tool

The most valuable use of a correlation is in predicting the future of a business direction. If marketers and salespeople can identify a correlation between the behaviour of consumers and events and a particular type of product or service, they can take advantage of the relationship to boost business and ultimately profits.

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