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Advertising and sales: Regression analysis

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Going back to marketing data

Using the data you provided collected for the two variables in calculate the least squares regression equation. Interpret the results of equation and determine what the results tell us about the relationship between the variables.

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Excel file contains interpretation of least squares regression equation.

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Regression analysis of annual sales based on advertising expense

Reliable Furniture is a family business that has been selling to retail customers in the Chicago area for many years. They advertise extensively on radio and TV, emphasizing their low prices and easy credit terms. The owner would like to review the relationship between sales and the amount spent on advertising. Below is information on sales and advertising expense for the last four months.

(a) The owner wants to forecast sales based on advertising expense. Which variable is the dependent variable? Which variable is the independent variable?
(b) the coefficient of determination.(R2) = 0.9308 what does this mean?

(c) The regression analysis formula is y= 2.2x + 1.5 What sales would we expect if we spent 2.5 million in advertising? 5 million?
Month Advertising Expense ($ Million) Sales Revenue ($ Million)
July 2 7
August 1 3
September 3 8
October 4 10

(d) Draw a scatter diagram.
(e) Draw the regression line.
(f) Determine the coefficient of correlation.

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