LIR832 Spring 2005 Final Examination Answer Key

# LIR832 Spring 2005 Final Examination Answer Key - LIR 832:...

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LIR 832: Final Examination: Spring, 2005 This examination is divided into two sections, each is potentially worth 50 points. The first section consists of four problems. You are to answer three of the four, each problem is worth 16.66667 points. Problems should be answered as completely as you are able. Partial credit on problems is only possible if I can locate errors in your calculations; neatness and organization of your answers is essential Remember, answer only three of the four problems, if you chose to answer all, I will select the three with the lowest scores. The second is the essay evaluating the article attached with this examination.

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Part 1: (50 Points) 1. The midterm included the following problem. “The saying, “penny wise and pound foolish” may apply to human resources as well as the balance of ones life. Consider rules that guide HR departments to limit the number of interviews so that they achieve fixed hire to interview ratios. Although such ratios may make sense for relatively homogeneous positions, for example a clerical, they make less sense for professional positions where the individuals fit with their co-workers will be critical to their effectiveness. We consider the effectiveness of such rules by considering five offices of a firm which hires technical sales workers. The firm has a rule that there should be no more than 6 interviews per hire but provides some latitude if locations have trouble locating the sales workers they believe are appropriately skilled and who fit the office. We have data on the net revenue of each office, the difference between sales and expenditures from a one year sample of each office.” Location Average Number of Interviews per Hire Net Earnings in the Last Year (in \$100,000.) 15 5 23 1 7 37 3 4 49 5 4 55 5 A. Taking net earnings last year as the dependent variable and the average number of interviews per hire as the explanatory variable, calculate the slope coefficient and intercept for the regression model.
Regression Calculations for the Final: X Y (X - XBar) (X -Xbar)^2 (Y -Ybar ) (Y -YBAR)^2 (x-xbar)*(y- ybar) 5 5 -0.8 0.64 -18 324 14.4 3 17 -2.8 7.84 -6 36 16.8 7 34 1.2 1.44 11 121 13.2 9 54 3.2 10.24 31 961 99.2 5 5 -0.8 0.64 -18 324 14.4 sum = 29 115 sum = 20.8 sum = 1766 158 avg= 5.8 23 slope coefficient = 158/20.8= 7.596 intercept =23-7.5961*5.8 = -21.058 B. What is the impact of an additional interview on net earnings in the prior year? What is the prediction of net earnings when the average number of interviews per hire is 0? Why shouldn’t the answer to this question bother us? Should the firm loosen its policy on the acceptable number of interviews per hire? Every additional interview increases net revenue by \$759,600. The predicted net revenue when the number of interviews per hire is negative \$2,105,800. This is the intercept of the model. The negative value of the intercept shouldn’t bother us because, first, the intercept is calculated to assure that the regression line goes through the point of means (that the error term is zero on average). Second, it is obviously outside of what we

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## This note was uploaded on 07/25/2008 for the course LIR 832 taught by Professor Belman during the Spring '07 term at Michigan State University.

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LIR832 Spring 2005 Final Examination Answer Key - LIR 832:...

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