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Regression analysis of factors that make a outlet profitable

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Fran's Convenience Marts are located throughout metropolitan Erie, Pennsylvania. Fran, the owner, would like to expand into other communities in northwestern Pennsylvania and southwestern New York, such as Jamestown, Corry, Meadville, and Warren. As part of her presentation to the local bank, she would like to better understand the factors that make a particular outlet profitable. She must do all the work herself, so she will not be able to study all her outlets. She selects a random sample of 15 marts and records the average daily sales (Y), the floor space (area), the number of parking spaces, and the median income of families in that ZIP code region for each. The sample information is reported below.

Sampled Daily Store Parking Income
Stores Sales Area Spaces $Thousands
1 $1,840 532 6 44
2 1,746 478 4 51
3 1,812 530 7 45
4 1,806 508 7 46
5 1,792 514 5 44
6 1,825 556 6 46
7 1,811 541 4 49
8 1,803 513 6 52
9 1,830 532 5 46
10 1,827 537 5 46
11 1,764 499 3 48
12 1,825 510 8 47
13 1,763 490 4 48
14 1,846 516 8 45
15 1,815 482 7 43

a. Determine the regression equation.
b. What is the value of R2? Comment on the value.
c. Conduct a global hypothesis test to determine if any of the independent variables are different from zero.
d. Conduct individual hypothesis tests to determine if any of the independent variables can be dropped
e. If variables are dropped, recompute the regression equation and R2.

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Solution Summary

The solution contains the details multiple regression analysis of factors that make a particular outlet profitable.The factors included in the study are records the average daily sales (Y), the floor space (area), the number of parking spaces, and the median income of families in that ZIP code region.

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Ans A: Regression Equation

Store Sales = 1480.745 + 0.731 Store Area + 9.991 Parking Space - 2.308 Income

Or Standardized Regression Equation

Store Sales = 0+ 0.560 Store Area +0. 526Parking Space -.201 Income

Ans B

R2 = 0.914 ...

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