ANALYSIS
Regression Analysis: An Example
10 15
12 20
14 20
16 25
20 30
Solutions:
ΣXY  ΣX.ΣY/n
b= 
ΣX2  (ΣX)2/n
ΣY  bΣX
a= 
n
___ ___
Or
a=Y–bX
X Y XY X2 Y2
10 15 150 100 225
12 20 240 144 400
14 20 280 196 400
16 25 400 256 625
20 30 600 400 900
72 110 1670 1096 2550
We get, b= 1.4527
Interpretation:
If the volume of sales increases for Tk. 1 lakh, profit of the
company increases for Tk. 1.4527 Thousand.
ii. The relationship between the variables in relative
term can be estimated with the help of the coefficient
of correlation, r.
2
ΣXY  ΣX.ΣY/n
r= 
_______________________
V [ΣX2  (ΣX)2/n] [ΣY2  (ΣY)2/n]
r= 0.98 –
Interpretation:
Interpretation:
Interpretation:
When the volume of sales is Tk. 50 lakh, profit will be Tk.
73.731 thousands.
3
6 Brittle Biscuits are new in Bangladesh. The Sales Manager of the
company has seen that in the last few months the sales revenue has
fluctuated widely. She was able to point fingers to two factors
affecting the sales revenue. Number of advertisements played on TV
and radio was one of them. The other factor was the type of flour
used in producing the biscuits, which, in turn, affected the cost of
production. Results of the multiple regression equation of sales
revenue on cost of production and no. of advertisements are given
below:
(a) Find the equation of regression of sales revenue on cost of
production and no. of advertisements.
(b) Estimate the relationship among the variables in relative
terms
(c) Assess the explanatory power of the independent variables
(d) Indicate which of these variables exerts more influence on
sales revenue.
(e) Assess the significance of the results
(f) Ascertain whether there is a problem of multicollinearity.
Interpret the results.
Regression
Variables Entered/Removed(b)
Model Variables Entered Variables Removed Method
ADV: No. of Advertisements,
1 . Enter
CP: Cost of Production (in Lac Tk.)
Dependent Variable: SR Sales Revenue (in Lac Tk.)
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .995 .991 .988 1.1386
ANOVA
Model Sum of Squares Df Mean Square F Sig.
1 Regression 947.325 2 473.662 365.345 .000
4
Residual 9.075 7 1.296
Total 956.400 9
5
Coefficients(a)
Unstandardized Standardized
Coefficients Coefficients
t Sig.
Beta
Model B Std. Error

(Constant) 15.658 5.639 .027
2.776
1
CP 3.235 .905 .769 3.575 .009
ADV .713 .669 .229 1.066 .322
a Dependent Variable: SR
Correlation Matrix
SR CP ADV