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Correlation/Regression Analysis Used in Decisions

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1. Please describe a situation in which a correlation analysis or regression analysis could contribute to a better decision. The situation can be from a work, of general interest, or experienced in private life.

2. Please describe a situation in which correlation analysis or regression analysis can be (or was) misused to explain cause and effect relationship or a case of fortuitous correlation.

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1. Suppose that I want to predict how much money I would spend on my monthly groceries in the month of July this year, based on the expenditure data that I have collected over the past 12 months. In this case, I can run a regression analysis with month number as the independent variable and the expenditure on groceries (in dollars) as the dependent variable. This prediction can help me budget my monthly income for July if I think I am going to ...

Solution Summary

324 words give a situation where these analyses can help make a better decision, and one where they can be misused for the opposite.

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Correlation and Regression Analysis and Descriptive Models

1. How can correlation and regression analysis be used to make strategic decisions in a dynamic competitive business environment filled with risk and uncertainty (Consider the relations, either descriptive or predictive that can be accomplished with correlation regression analysis)?

2. What is the difference between a descriptive model that is developed using multiple regression analysis with time-series data and a model that is considered predictive?

3. How can multiple regression and time-series data be employed in financial forecasting by a company? Research if such forecasting models are being used within your own company, or one with which familiar. Are they (Please provide a 1 or 2-sentence response about what found).

4. How can one avoid misusing time-series analysis and multiple regression analysis within a business setting? If one does not know for certain that the data fits a normal distribution, is there a problem?

5. Why is the use of ranking of data and results of particular use in the study of consumer behavior? Once the ranking is determined, can the ranking and a specific behavior possibly be linked through multiple regression analysis?

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