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2 var regression-STUDENT version-sport

# 2 var regression-STUDENT version-sport - Model 1 1 x y=...

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Click to edit Master subtitle style 11 The Two-Variable Regression  Model   Reminder: open OLS B-hat formulas example- sport.xls y =  α  +  β 1 x1 +

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2Slide #2 Intentionally left blank
3Slide #3 Do Large Market NBA Teams Make Higher Profits? See regression output. Obj100

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4Slide #4 II. Regression To study the influence of advertising on profits, the  Celtics compiled the data in Table 1. This sample  is for each of the last five years. Ad expenditures  are in \$100,000s  and profits are in millions of  dollars . Table 1.                                                                                                                     Year                                1        2      3      4      5
5Slide #5    Regression (cont.) Ad Expenditures (x)      2    3    4.5 5.5 7 Profit (y) 3    6    810     11  The Celtics need answers to these questions 1. Does advertising increase profit? 2. How much does another \$100,000 spent on  advertising increase profit?

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6Slide #6    Regression (cont.) 3. What will our profit be if we spend \$800,000 on  advertising? 4. How much will we need to spend on ads to  generate \$12,000,000 in profit?
7Slide #7   Regression (cont.) Surprisingly, one statistical decision-making  tool can provide answers to  all  of these  questions -- and more. The tool is called  regression analysis . Obj103

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8Slide #8       Regression (cont.) A. Regression analysis is a statistical  technique  B. A ttempts to "explain" movements in one  variable, the  dependent variable  . . .
9Slide #9  Regression (cont.) C. as function of movements in a set of other  variables, the  independent variables  . . . D. through the quantification of one or more  equations.

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10Slide #10  Regression (cont.) E. Two-variable model 1. Simplest of regression models y =  α  +  β x + “ 2.  “Model” is used to describe behavior of  variables; often an equation 3. Will cover a) Estimating it
11Slide #11 Who Uses This Northwestern Memorial Hospital, which has  the largest birthing facility in the Midwest,  uses a  simple regression model  to forecast  delivery volume based on previous delivery  volumes. (Source: Jerry Lassa,  Northwestern Memorial Hospital, Chicago,  IL.)

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12Slide #12 Who Uses This IRI, the largest market research firm in the  United States uses  simple regression  on  adjusted weekly sales data to determine  baseline sales when there is no special  promotion. (Source: Doug Honnold, IRI,  Inc., Chicago, IL.)
13Slide #13 Regression (cont.) To use regression analysis for answering those  questions, the analyst needs to find

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