Coefficient of determination-interpretation

Reference no: EM1322406

A CEO of a large pharmaceutical company would like to determine if he should be placing more money allotted in the budget next year for television advertising of a new drug marketed for controlling asthma. He wonders whether there is a strong relationship between the amount of money spent on television advertising for this new drug called XBC and the number of orders received. The manufacturing process of this drug is very difficult and requires stability so the CEO would prefer to generate a stable number of orders. The cost of advertising is always an important consideration in the phase I roll-out of a new drug. Data that have been collected over the past 20 months indicate the amount of money spent of television advertising and the number of orders received.

The use of linear regression is a critical tool for a manager's decision-making ability. Please carefully read the example below and try to answer the questions in terms of the problem context. The results are as follows:

Month	Advertising Cost (thousands of dollars)	Number of Orders
1	$68.93	4,902,000
2	72.62	3,893,000
3	79.58	5,299,000
4	58.67	4,130,000
5	69.18	4,367,000
6	70.14	5,111,000
7	83.37	3,923,000
8	68.88	4,935,000
9	82.99	5,276,000
10	75.23	4,654,000
11	81.38	4,598,000
12	52.90	2,967,000
13	61.27	3,999,000
14	79.19	4,345,000
15	80.03	4,934,000
16	78.21	4,653,000
17	83.77	5,625,000
18	62.53	3,978,000
19	88.76	4,999,000
20	72.64	5,834,000

Compute the coefficient of determination, r², and interpret its meaning.

Reference no: EM1322406

Questions Cloud

To test the independence of attributes : Sample data are reported for 50 employees of small companies, 75 employees of medium companies, and 100 employees of large companies.

Examining supply chain profitability : In this web research assignment, you will research a company which uses supply chain management (SCM) and look at how their organizational profitability is affected by it.

Estimation of standard error : Compute the standard error of estimate, and interpret its meaning.

Find the point between these two charges : A charge of +2.00 x 10^-9 C is placed at x = 0.0 m. A second charge of +4.00 x 10^-9 C is placed at x = 1.5 m.

Coefficient of determination-interpretation : Compute the coefficient of determination, r 2 , and interpret its meaning.

Describe an organizational change : Briefly describe an organizational change you have experienced. Which leadership styles did you observe from those who implemented the change?

The representation of combined magnetic field : hysicists model a magnetic field by assigning to every point in space a vector that represents the strength and direction of the field at that point. Two magnetic fields that exist in the same region of space may be added as vectors at each point to ..

Prediction using linear regression equation : The use of linear regression is a critical tool for a manager's decision-making ability. Please carefully read the example below and try to answer the questions in terms of the problem context.

Identifying key strategic issues : You have been charged by Andres Moberg to with identifying key strategic issues facing the company in the next 10 years, and to recommend an action addressing each issue.

User Account

All Pages