Reference no: EM132432393

Problem: A marketing manager conducted a study to determine whether there is a linear relationship between money spent on advertising and company sales. The last 11 years data is listed below:

Advertising Expenses (1000s of $)

24

16

20

26

14

16

20

18

18

17

22

Company Sales (1000s of $)

235

184

220

260

180   

194

201

101

220

185

215

Create a scatterplot to answer the following questions: (you do not have to show me the plot)

a.) Describe the direction, form, and strength of the scatterplot.

b.) Find the equation of the regression line for this data. (Use all of the data points.) Round your equation to two decimal points.

c.) Find the value of the correlation coefficient. Does this number confirm your description in part a? (you should be discussing 2 things from part a)

d.) Are there any company sales figures that seem out of line with the rest of the data? If so, which one?  Can you explain why this might happen?

e.) Assume that your answer in part d has made you question your analysis? Remove the point that is out of line and recalculate the correlation coefficient. r = ________________ Is the result of this correlation coefficient more or less like what you expected in part a? Explain.

f.) State the slope and the intercept of the regression line (from b.) Interpret each in a sentence.

g.) If the company president wants to spend $17,000 on advertising. What would you predict that the company sales would be using the regression model (from b)?

h.) Determine the residual for spending $17,000 on advertising? Interpret the meaning of this residual?

i.) Would this model be useful in estimating company sales if the company decided to spend $200,000 on advertising? Explain.