PUPPALA KARTIK

STARBUCKS INTRODUCES DEBIT CARD

SECTION B

1) Here, dependent variable, y = Amount of Prepaid Card ($)

Ind. variables, x1 = Age, x2 = Days spent/month , x3 = Cups/day, x4 = Income ($1000)
Regression Statistics
Multiple R
R Square
Adjusted R
Square
Standard Error

0.8687002
83
0.7546401
81
0.7055682
18
22.148315
63

Interce
pt

25

X Var 4

Observations

X Var 1
X Var 2
X Var 3

Coeff

t Stat

P-value

83.825
7
0.2369
29
1.1896
57
1.4216
11
2.4065
43

3.7265
1
0.4114
02
0.8071
3
0.5403
21
6.6900
62

0.0013
32
0.6851
53
0.4290
86
0.5949
42
1.64E06

The regression equation is: = -83.826 + 0.237x1 + 1.189x2 + 1.421x3 + 2.406x4

F value is 15.378, with p = 6.76E-06, meaning the model adds good predictability. R2 is
0.7546 and adjusted R2 is 0.7055, so R2 is inflated by only 4.81% and 70.55% of the variance
of Card Amount can be explained by the model, which is high, so the model is quite good.
The t-statistic is significant only for variable x4 (6.69) with an associated p value of 1.64E-06.
For other variables, p value is high, so only income acts as a good predictor for Card Amount.
2) Here, dependent variable, y = Days spent/month at Starbucks
Independent variables, x1 = Age, x2 = Cups of coffee/day, x3 = Income ($1000)
Regression Statistics
Multiple R
R Square
Adjusted R
Square
Observations

0.6405
12
0.4102
56
0.3260
07

Interce
pt

25

X Var 3

X Var 1
X Var 2

Coeff

t Stat

0.9785
1
0.0687
46
0.3340
46
0.0115
5

0.5279
5
1.5159
61
3.4038
94
0.3886
7

P-value
0.6030
68
0.1444
38
0.0026
74
0.7014
34

The regression equation is: = -0.97851 + 0.069x1 + 0.334x2 0.012x3

F value is 4.87, with p = 0.01, meaning the model adds predictability only for > 0.01. R2 is
0.41 and adjusted R2 is 0.326, so R2 is inflated by 7.40% and only 32.60% of the variance of
Days spent can be explained by the model, so the model is not very good.
The t-statistic is significant only for variable x2 (3.404) with an associated p value of 0.00267.
For other variables, p value is high, so only age acts as good predictor for Days spent/month.
3) Here, dependent variable, y = Sales Revenue
Independent variables, x1 = No. of stores, x2 = No. of drinks, x3 = Avg. weekly earnings

The regression equation is: = -13500.2 - 0.026x1 75.2x2 + 38.99x3

F value is 4539.2, with p = 5.5E-06 so the model adds considerable predictability. R2 is
0.9998 and adjusted R2 is 0.9995 which are almost similar. So 99.95% of the variance of
Sales can be explained by the model, so the model is excellent.
The t-statistic is significant for variables x2 (-7.468) and x3 (38.98) but not so much for x2 (0.9517), so No. of drinks and Avg. weekly earnings act as good predictors for total Sales
Revenue.
PUPPALA KARTIK

VIRGINIA SEMICONDUCTOR

SECTION B

1) We use Stepwise Regression here. After 1st step, Company Size is the best predictor with
the highest t-value (5.64). After 2nd step, central purchasing is added to the model. Even
though the coefficient for x1 is small, we dont ignore it as its unit is million. In the next step,
no significant t-value is seen, so there are only 2 predictors in the model.
Regression Statistics
0.87750
Multiple R
6
0.77001
R Square
7
0.73463
Adjusted R2
5
87.3959
Standard Error
4
Observations

16

Coefficien
ts
Intercept

-7.77108

Size (x1)
Purch.
(x4)

1.450821
109.407
df

Regressio
n

t Stat
0.19801
4.26348
2.06743
5
F
21.7629
5

P-value
0.846097
0.000924
0.059204
Significan
ce
7.1E-05

The multiple regression model is: = -7.77 + 1.45x1 + 109.407x4

F is 21.763, which is high and the R2 (0.77) as well as adjusted R2 (0.734) values are quite
high so the model is quite strong. The Company Size ($ million sales) is the most important
predictor variable while central purchasing agent also plays an important role.
2) Stepwise regression shows that neither predictor has significant t-value. A scatter plot for
hours (x1) and number of customers (x2) are close to lower left and upper left quadrants of
Tukeys approach respectively. So new variables recoded are log(x) and -1/sqrt(x).

Stepwise regression gives the model: = 497.22 61.25/sqrt(x2) + 5.6x1 436.9log(x1)

F is 12.28 while the R2 and adjusted R2 are 0.84 and 0.77 respectively, which means the
model is pretty good. The first two variables in model are significant predictors with p-values
0.003 and 0.034 respectively.

3) The scatter chart is same as upper left quadrant of Tukey so we consider logx and -1/sqrtx

Intercept
log (x)
-1/sqrt
(x)
No. of
Emp

Coeff
30148.68
-11275.6

t Stat
5.804087
-5.71603

P-value
0.001147
0.001242

85605.8

5.974743

0.000986

9.429008

5.268947

0.001885

The regression equation is: = 30148.68 11275.6log(x) - 85605.8/sqrt(x) + 9.43x

F is 127.8 while R2 and adjusted R2 are 0.984 and 0.976 respectively which mean the model
is very good. In the 1st step, -1/sqrt(x) enters the model, in the 2nd step, log(x) enters while in
the final step, x enters the model.