15_Building_Regression_Models_Part2 - BUILDING REGRESSION MODELS PART 2 Topics Outline Include\/Exclude Decisions Variable Selection Procedures Example 1

15_Building_Regression_Models_Part2 - BUILDING REGRESSION...

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- 1 - BUILDING REGRESSION MODELS – PART 2 Topics Outline Include/Exclude Decisions Variable Selection Procedures Example 1 Explaining spending amounts at HyTex HyTex is a direct marketer of stereo equipment, personal computers, and other electronic products. HyTex advertises entirely by mailing catalogs to its customers, and all of its orders are taken over the telephone. The company spends a great deal of money on its catalog mailings, and it wants to be sure that this is paying off in sales. The file Catalog_Marketing.xlsxcontains data on 1000 customers who purchased mail-order products from the HyTex Company in the current year. For each customer there are data on the following variables: Age age of the customer at the end of the current year Gender = 1 for males, 0 for females OwnHome = 1 if customer owns a home, 0 otherwise Married = 1 if customer is currently married, 0 otherwise Close = 1 if customer lives reasonably close to a shopping area that sells similar merchandise, 0 otherwise Salary combined annual salary of customer and spouse (if any) Children number of children living with customer PrevCust = 1 if customer purchased from HyTex during the previous year, 0 otherwise PrevSpent total amount of purchases made from HyTex during the previous year Catalogs number of catalogs sent to the customer this year AmountSpent total amount of purchases made from HyTex this year Develop a multiple regression model that is useful for explaining current year spending amounts at HyTex.
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