2/22/2014

Simple Linear Regression and the Regression Equation

Simple Linear Regression and the Regression Equation

Similar to correlation, regression analysis is a method for exploring the relationships between variables, but it expresses the relationships in the form of an equation. Simple linear regression is used in conjunction with correlation coefficients and scatter diagrams to predict future performance based on past results. It models the relationship between one output and one input. Simple linear regression analysis has these characteristics: Regression analysis is conducted after the relationship between variables has been verified using a scatter diagram and correlation coefficient. A low p-value (less than 0.05) indicates sufficient evidence to believe that the slope of the line is not 0. In other words, a statistically significant linear relationship exists between the two variables. The simplest regression model is one that uses one input variable (x) to define or predict one output (y) in a linear fashion. This is the linear regression model. More complex multiple regression models can relate more than one x where the relationships are expressed as even more complex quadratic equations. The linear regression model is used to find the least-squares regression line , which provides the regression line that best fits the data. This line is the one that minimizes the sum of the squared vertical distance from the data points (x, y) to the line. The regression equation Linear regression models the relationship between two variables by fitting in a linear equation to the given data set. Any number of lines can be drawn through a set of data points, but the best-fitting line is called the least-squares line. The least-squares regression model is used to determine the line that is closest to all the data points simultaneously. This model is later used for estimating and predicting future outcomes based on past performance. The most common method for fitting a regression line (or developing a regression equation or model) is the method of least squares. The formula for simple least-squares linear regression is y = b1 + (bx) + e. Each variable in the equation represents a component of simple least-squares linear regression: y is the output to be predicted b1 is the point at which x is zero (also known as the y intercept) b is the regression coefficient x is the input variable e is the random error Random error, e, is the difference between an observed value of y and the mean value of y for a given value of x. However, e is taken into consideration only when many samples have been observed from a population. When this is not the case, "+ e" is omitted from the formula and the subsequent calculation. Before the simple least-squares linear regression calculation can be done, the regression coefficient, b, and the point at which x equals zero
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2/22/2014

Simple Linear Regression and the Regression Equation

b1 or the y intercept must be known. Predicting variable values The least-squares regression model can be used to predict variable values or other data points in the population. This is important because it helps Six Sigma teams to understand how actions they take will affect the output, and move them toward the project goal. Sometimes actions that seem appropriate aren't, or at some point extra effort may yield little or no positive results. A way to predict future performance is a significant advantage when striving for process improvement. With the inputs that are key sources of variation identified, and the correlation between these inputs and the output verified, the Six Sigma team can now reasonably focus on activities that will reduce or eliminate these sources of variation. Using the simple least-squares linear regression model can help the team predict future performance, at various values of x, based on past performance results. Simple linear regression helps Six Sigma teams put the data they have collected about inputs and outputs to work. Used in conjunction with scatter diagrams and calculated correlation coefficients, it helps Six Sigma teams predict future performance based on past results. While there are various regression models, the simplest of them is the simple least-squares linear regression model. It is used to relate one input to one output. The formula for simple least-squares linear regression is y = b1 + (bx). Predicting variable values of x can help Six Sigma teams focus their improvement efforts in the most efficient and effective way.

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