Reference no: EM13578978

Question: The president of a company that manufactures drywall wants to analyze the variables that affect demand for his product.  Drywall is used to construct walls in houses and offices. Consequently, the president decides to develop a regression model in which the dependent variable is monthly sales of drywall (in hundreds of 4x8 sheets and the independent variables are

Number of building permits issued in the county

Five year mortgage rates (in percentage points)

Vacancy rate in apartments (in percentage points)

To estimate a multiple regression model, he took monthly observations from the past 2 years.

a) Analyze the data using multiple regression

b) What is the standard error of estimate? Can you use this statistic to assess the model's fit?  If so, how?

c) What is the coefficient of determination, and what does it tell you about the regression model?

d) Test the overall validity of the model

e) Interpret each of the coefficients

f) Test to determine whether each of the independent variables is linearly related to drywall demand in this model

g) Predict next month's drywall sales with 95% confidence if the number of building permits is 50,the 5-year mortgage rate is 9.0% and the vacancy rates are 3.6% in apartments and 14.3% in office buildings.

Drywall	Permits	Mortgage	A Vacancy	O Vacancy
328	49	8.35	2.98	13.43
376	79	8.08	5.6	14.51
373	79	7.9	2.25	14.24
144	50	7.69	4.26	14.3
194	37	7	2.6	11.64
220	53	7.32	2.97	10.61
126	22	8.4	5.35	18.45
301	69	8.28	3.13	18.52
54	21	8	5.6	10.29
252	46	8.95	4.81	11.91
381	79	8.21	5.88	17.75
173	30	7.24	2.98	18.16
152	38	7.35	5.69	17.14
351	73	7.27	4.86	16.11
233	55	7.08	5.68	18.54
35	12	7.76	4.46	19.46
290	62	8.21	2.23	19.26
5	12	7.76	5	17.28
335	60	7.2	2.42	15.15
280	49	7.57	3.25	19.94
101	14	8.44	3.61	15.47
297	66	8.43	2.13	12.75
309	62	8.14	4.35	12.24
233	40	8.81	2.31	18.65