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1 (de) vizualizări9 paginiStylo shoes

May 06, 2017

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Stylo shoes

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1 (de) vizualizări

WAC-LP

Stylo shoes

© All Rights Reserved

- HW1_N
- Chapter 5 - Cost Estimation
- Modeling Lowe's Sales - Simonoff(1)
- Regression
- Design of Experiments1
- Dissertation Report 23
- Presentation (1)
- 15IJHRMRFEB201915
- Intervention Analysis
- thesis-a
- Business Research and Report Writing Report Report - Telecommunication
- Base Line Characteristics
- Wong 2004
- Genetika-Kampleng.docx
- regresi sederhana
- Market Share Rewards to Pioneering Brands.pdf
- Multiple Regression
- Correlation and Regression
- 08test
- 16_CurveFitting

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1-Developing Model

Basic Model

Table 1 and Table 2 show the statistical evaluation of the basic model. Almost 60% of the variation

is explained by the independent variable used in this basic model. The omission of statistically

insignificant variables (Debit and Interest as shown in Table 3) cannot be explained intuitively,

therefore improved model is developed. Equation for basic model is given below.

Bal= 186.959+85.165 ATM + 65.017 S +413.527R +54.99L +27.463F+E

Where

Bal= Balance I = Interest, S = Services, L= Lahore, R = Rawalpindi, F = Faisalabad, E=Error

Table 1

Table 2

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Table 3

Improved Model

Improved model is developed by transforming the dependent variable into Natural Logarithm and

by taking the square of one of independent variable i.e. Services. Squaring Services is explained

by the jump in adjusted R square (from 0.485 to 0.560).

Figure A and Table 4 explains the Jump in adjusted R square. Figure A represents the model

summary for model in which services square is not considered. When service square is used in the

regression there is nice jump in the adjusted R square.

Though the adjusted R square is reduced to 0.560 as compared to basic model but this improved

model includes Interest as an independent variable which is gives economic sense. Addition of

interest in model also reduces the standard error of estimates to 0.49689.

The model equation is given as below.

Ln (Bal) = 4.796 +0.074 ATM + 0.531S 0.044 S^2 +2.961 I + 0.368L + 0.384 R 0.088F+E

Where

Bal= Balance I = Interest, S = Services, L= Lahore, R = Rawalpindi, F = Faisalabad, E=Error

Figure A

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Table 4

Table 5

2-Independent Variables

In the improved model Debit Card is not statistically significant. Table 6 shows that after addition

of debit in the regression model the adjusted R square just jumped from 0.560 to 0.564. This

increase of 0.04 is very minimal. Another important change observed in the block diagram in Table

7 is that none of the dummy variable remain statistically significant after addition of debit in the

regression model. Addition of debit card does not significantly enhance the variation explained in

dependent variable and is not statistically significant, hence it is dropped from the model. Table 6

and Table 7 show that there is a good jump in adjusted R square with addition of new variable

expect for debit card.

Cognitively, from the data provided, all the customers who do not have a debit card have still used

ATM.

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Table 6

Table 7

Row 4 of Table 8 shows that model as a whole is statistically significant as the P-Value is less than

0.05.

Table 4 provides the information regarding individual regression coefficients. Individual

Coefficients are statistically significant, the stated P-values are less than 0.05. In case of dummy

variable of city, if any of the dummy variable is statistically significant than we should consider

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all dummy variables in our regression. In this approved model, P-Value of Rawalpindi is 0.043

which is less than 0.05 so all dummy variables are statistically significant.

Table 8

Table 4 shows that adjusted R square equals to 0.560. This explains that a total of 56% variation

in dependent variable is explained by variation in independent variables.

5-Checking Assumptions

Figure B shows that the residuals follow the normal probability distribution.

Assumption 2: Variation of residual along regression equation is same.

Figure C does not show heteroscedasticity, therefore further investigation is not required.

Assumption 3: The residuals are independent.

From Table 9, Models Durbin Watson is 1.765 which lies in the inconclusive rage (1.3349-

1.8505), but it is very Close to the acceptance range, therefore in this case Null Hypothesis i.e.

there is no autocorrelation is accepted.

Assumption 4: Multicollinearity

Table 5 shows the variance inflation factor. The calculated values are in acceptable limits. Though

service and service square VIF values are greater than 10, but mathematically one quantity is

square of other so this is acceptable.

Assumption 5: Linear relation

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Figure D and Figure E show the relationship between Y and X variable that is linear. In this model

quadratic relationship with services is considered to improve adjusted R square.

Figure B Figure C

Figure D Figure E

Table 9

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Ln (Bal) = 4.796 +0.074 ATM + 0.531S 0.044 S^2 +2.961 I + 0.368L + 0.384 R 0.088F+E

The signs of coefficients with independent variables (ATM, Interest) have expected signs.

Variables included in the regression equation are all significant. These signs imply that these

variables have direct relationship with balance. If any of these variable will increase the balance

will increase and if any of these variable will decrease the balance will decrease. For example if

ATM transactions will increase one unit there will be 7.4% increase in balance holding other

independent variable fixed. If interest will by 1 unit increase there will be 296% increase in

balance.

Keeping other variables fixed, balance with respect to services is increasing at a decreasing rate

till it reaches the inflation point. The maximum balance achieved is at inflation point i.e. 6.

Assuming that all other independent variables are fixed, the balance of a customer in Lahore will

be 36.8% higher relative to customers balance in Sialkot. Similarly the balance of a customer in

Faisalabad will be 8.8% less than the balance of a customer in Sialkot. A customer in Rawalpindi

will have 38.4% more balance than a customer in Sialkot

7-Estimating Balance

Ln (Bal) = 4.796 +0.074 ATM + 0.531S 0.044 S^2 +2.961 I + 0.368L + 0.384 R 0.088F+E

1. 793.2

2. 954.5

3. 792.6

Customers are encouraged to keep more balance in the Social Bank if they are getting more

interest. Balance has a strong direct relation with the interest. With every unit increase in interest

rate the balance is increased by 296%, which is a huge increment. Therefore to increase the bank

balance Social Bank should offer more interest. Of course this cannot be increased beyond certain

limit or the bank would incur loses.

ATM transactions do increase the balance but just by 7.4%. Social Bank can tap this option too

but the effect will be very minimal as compared to interest rate. Furthermore Services provided by

the bank encourages the customer to keep more balance but this increase is at a decreasing rate i.e.

after reaching the inflation point the balance will start to decrease.

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A maximum of 6 services should be provided by Social Bank to any customer, after which the

balance will start to decrease. Customers in Rawalpindi tend to have highest balance among the

sampled cities.

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