Develop a regression model to predict sales

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Reference no: EM13855620

Regression

Ranbaxy Laboratories Ltd, incorporated in 1961, is one of india's largest pharmaceutical companies, Following table exhibits the sales volume & advertisement expenditure (in million rupees) of Ranbaxy Laboratories Ltd from 1989-1990 to 2006-2007

Year

Sales (In million rupees).

Advertisement (In million rupees).

1989-1990

2064.5

30.4

1990-1991

2587.8

51

1991-1992

3396.9

59.1

1992-1993

4622.2

79.5

1993-1994

5944.7

50.8

1994-1995

7139.2

98.2

1995-1996

8940.1

112.7

1996-1997

  10,427.3

141.6

1997-1998

  12,421.3

224.8

1998-1999

  11,296.5

169.8

1999-2000

  16.670.3 

409.3

2000-2001

  17,757.1

560.2

2001-2002

  19.597.8.

863.5

2002-2003

  31,317.6

1306.5

2003-2004

  38,889.8

1822.6

2004--2005

 38658.7

2017.2

2005-2006

  32,840.3

2008.1

2006-2007

  35,991.5

1487.1

Regression was run on MS Excel and the partial result below was extracted from the Excel result..

SUMMARY OUTPUT

 

 

 


 

 

 

 

Regression Statistics

 

 

 

 

Multiple R

0.9672348

 

 

 

R Square

0.9355432

 

 

 

Adjusted R Square

0.9315146

 

 

 

Standard Error

3430.2371

 

 

 

Observations

18

 

 

 

 

 

 

 

 

ANOVA

 

 

 

 

 

df

SS

 

 

Regression

1

2732519348

 

 

Residual

16

188264427.6

 

 

Total

17

2920783775

 

 

 

 

 

 

 

 

Coefficients

Standard Error

T Stat

Lower    Upper

95%       95%

Intercept

5794.29

1079.85324

5.3668

   3506. 8083

advertisement

17.0779

1.12067000

15.239

   14.70 19.46

By using the results above & α=0.05, develop a regression model to predict sales from advertisement expenses incurred by performing the following steps.

  1. State the linear relationship between sales & advertisement & interpret the coefficients.
  2. Obtain the coefficient of determination & interpret it.
  3. Obtain the standard error of estimate & interpret it.
  4. Comment on the t test for the slope of the regression line using confidence interval
  5. Predict sales when advertisement is 3000 million rupees

Reference no: EM13855620

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