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Linear Regression

The document provides three examples of simple linear regression modeling: 1) A cable company wants to predict sales based on advertisement expenses. Monthly data over 12 months is given. 2) A company believes salespeople can predict sales. Data on sales and number of salespeople for different years is provided. 3) Cadbury India Ltd data from 1989-2007 on advertisement spending and profit after tax is given to develop a regression model to predict profit from advertisements.

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AINDRILA BERA
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214 views

Linear Regression

The document provides three examples of simple linear regression modeling: 1) A cable company wants to predict sales based on advertisement expenses. Monthly data over 12 months is given. 2) A company believes salespeople can predict sales. Data on sales and number of salespeople for different years is provided. 3) Cadbury India Ltd data from 1989-2007 on advertisement spending and profit after tax is given to develop a regression model to predict profit from advertisements.

Uploaded by

AINDRILA BERA
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Problems on Simple Linear Regression Model

1. A cable wire company has spent heavily on advertisements. The sales and advertisement
expenses (in thousand rupees) for the 12 randomly selected months are given in Table below.
Develop a regression model to predict the impact of advertisement on sales.

Sales and advertisement expenses (in thousand rupees)of a cable wire company
Months Advertisement (in thousand Sales (in thousand rupees)
rupees)
Jan 92 930
Feb 94 900
Mar 97 1020
Apr 98 990
May 100 1100
Jun 102 1050
Jul 104 1150
Aug 105 1120
Sep 105 1130
Oct 107 1200
Nov 107 1250
Dec 110 1220

2. A company believes that the number of salespersons employed is a good predictor of sales. The
following table exhibits sales (in thousand rupees) and number of salespersons employed for
different years.
Sales (in thousand rupees) Number of salesperson employed
120 10
125 15
118 12
115 18
100 20
130 21
140 22
135 20
130 15
123 19

3. Cadbury India Ltd. incorporated in 1948, is wholly owned Indian subsidiary of the UK based
Cadbury Schweppes Plc., which is a global confectionary and beverages company. Cadbury India
Ltd. operates in India in the segments of chocolates, sugar confectionary and food drinks. The
following table provides data relating to the profit after tax and advertisement of Cadbury India
Ltd. from 1989-1990 to 2006-2007.
Year Advertisement (in million Profit after tax (in million
rupees) rupees)
Mar 1990 73.4 55.5
Mar 1991 101.8 55.1
Mar 1992 99 37.1
Mar 1993 110.9 13.6
Mar 1994 145.3 86.8
Mar 1995 127.7 95.9
Mar 1996 190.3 200.8
Mar 1997 255.9 196.3
Mar 1998 296.2 185.7
Mar 1999 394.1 262.1
Mar 2000 532.8 367
Mar 2001 577.8 520.2
Mar 2002 731.6 574
Mar 2003 876.7 749.1
Mar 2004 904.4 456.5
Mar 2005 910.2 462.1
Mar 2006 958.2 459.6
Mar 2007 1218.5 688.1

Develop a simple regression line to predict the profit after tax from advertisement.

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