John Molson School of Business Department of Supply Chain and Business Technology Management MBA 643 Fall 2018 Assignment 2 SOL vH ONS Due November 7, 2012 ate Dr D. Morin : To be done in group of 2 people LESIONS 1 1) A Citizen Protection Group has warned the government about recurring poor air quality indicators due to the presence of Carbon Monoxide CO which is a colorless poisonous gas that is emitted directly from automobile, Some years ago, a limit of 2.1 g/km on exhaust gas emissions was imposed. A recent data collection on a random set of 50 cars generated the following results: [ Exhaust gas emission levels on 50 cars | 1.9 1.24 1.24 159 2.98 | 2.98 0.08 0.83 2.19 2.16 [aa 213 9: 1.49 1.03 2.14 1.98 [2.07 1.91 1.92 1.87 2.13 {_ 2.89 2.97 202 1.73 1.87 051 aii 2.20 1.85 0.67 {2.69 2.03 2.17 1.60 2.45 { 2.04 1.36 19 2.04 1.88 aaa 2I3 2) 2.49 1.20 155) 1.23 L199 1.62 1.48, 2.17 2.07 If there enough evidence to conclude that more 3 $% of cars do not respect the limit of 2.1g/km? Use a = 0.05. What is the p-value and indicate your assumptions?A sample of 30 observations was collected to perform a multiple linear regression to predict Y based on X1, X2 and X3, The following Excel partial output was obtained: SUMMARY OUTPUT [ANOVA _|_df SS MS. FE Regression Statistics Regression aa Standard Error _| 3.21 Residual R Square: 0.35 Total Coefficient StdError 4 Stat Intercept -7.40 10.11 X 8.50 1.07 X -1.01 0.59 Xs 3.20 1.27 a) At 5%, test the overall significance of the multiple regression. 2 3, = Vmse 2 MSE =G,9) ANOVA [df SS MS F ree Regression | 3 | 74 x50[ 42. 920 | Lore SSE= 364 (Jo,304) Residual [aq [267904] 10.30# 5 Total “39 1472. 16 } tho: B = Hy, ak' a= 0.08 Reyit to ef F > F = 2.49452 3,36,-05 Fe Auet > 2.9452 =) tepette =atlaat me Pi 2 okt te pragefpenit | Prdue = P(F, 1 > tect) ~.007¢ wang ercel, \b) Which of the following values for @ is the smallest for which the regression model as a whole is significant? Is it a=0.005? or a=0.01? or @=0.025? ora=0.05? Pralor=O-.001F 3 Nedwqunriy plan ak x: c) Which of the independent variables in the model are significant at the 5% level? Which predictor is the most significant? Coefficient StdError t Stat Intercept -7.40 10.11 Xi 8.50 1.07 cecil X2 -1.01 0.59 LZ Xs 3.20 1.27 2.3% Ho: 4, =O Ho A2=0 is By) Ih Bs FO lupe Ho Uf le es [el /aSal > 40 PEl> 2 Ce id) & 4 tnd X3 Neg ee +he mor 6 d) Calculate the adjusted coefficient of determination and interpret. Regression Statistics Standard Error [3.21 R Square [0.35e) Atthe 1% level of significance, can we conclude that X3 has a positive impact on Y? b; £0 Hi B2 >0 / Repect Holf >t ab,.0= 9 1786 (me stdbec f= b,-O = 3,20 -6 Se 2 Sp, l2Qz 152 > 2.479 aeetiio = B,>0 =) Yee x3 haw a r-vrahee =P(L 2 52) # p FCC, pas ae a Crepe = ,007/ £) One of the observation in the sample was Xi = 1, X2= 9, X3=2 and Y=18.1. What is the corresponding residual? A Roudual aan) io =p 4o SSO Gt) —!.0/ (9) =f 3,2(2) = asd = G023) Several farmers were interested in the relationship between the mean temperature, the rainfall in July and the output of sugar beets. The following data for the last fifteen years was collected at a certain farm: Production | Temperature | Rainfall (em) | 18 ar 73 178 93 15 83 16.1 10.1 16.6 10.8 [ns 1¢'S | SNETONS 13.5 98 144 10.8 153 97 17.2 10.2 17.2 82 15.5 9.5, 18.1 78 16.3 10.9 a) Atthe 5% level of significance, can we conclude that the average temperature in July was less than 17.5 1C? What is the p-value? Ho: & Hi Temperature (°C) a | [ween | s,37393335 [Median |____ teal [Mode |. ___16. Kurs [sewness____ | _-0.381923009] a [Minimum P33 Maximum | umd ount >b) At the 1% level of significance, can we conclude that the average rainfall in July is more than 9.2 cm? What is the p-value? Rainfall (cm) Standard Error eens Tiss 142665 -0,923219 -0,562479 ©) Can we conclude that the production of beets is higher when the average rainfall in July is less than 10 cm? Use a 5% level of significance. What is the p-value. aihen (ht ‘roductions according to Rainfall d nin bie Rain less than 10cm Rain at least 10 cm mM 589.6 498,8 4, 5535 450,2 } 507,9 471,6 ul 5263 5214 580,5 462,3 432,6 510,3 585,2 470,1 560,2 Average= 541.975 Average = 483.5286 St. Dev. = 52.719 St.Dev. = 26.672 244-2 l3ait-3sy[ t-Test: Two-Sample Assuming Unequal Variances less more Mean 541.9750 | 483.5286 Variance 2779.3421 | 711.3724 Observations 8 7 Hypothesized Mean Difference 0 11 2.7581 one-tail 0.0093 “yf ‘Critical one-tail 1.7959 P(T<=t) two-tail 0.0186 t Critical two-tail 2.2010 t-Test: Two-Sample Assuming Equal Variances | tess more Mean 541.9750 _| 483.5286 Variance 2779.3421 711.3724 Observations 8 7 Pooled Variance 124.8946 Hypothesized Mean Difference 0 af 13 tstat 2.6435 P(T 3,478 yn oe 3 wn nob.d DA L meg d) Which independent variable is the most significant? haeco most & rf UL0eF5 pTeiusg = .0000 3 2 Crcant predeetene) What is the coefficient of determination? Interpret 3 Regression De Statistics s besa 34% of ha Varratcon R Square 0,9734 : Lal i Adjusted R Square 0,9628 OE EAN ae Standard Error 14,5895 Te Observations 15 ae & » ae f) What is the adjusted coefficient of determination? Interpret Ra aw rm Cudct Ste Use ctiatern) whl Lp 3 and ender He yvuembor of A, Drew and sangoke s58 8) What is the final regression model with all significant coefficients at 5%? What is the new coefficient determination? ie fora fo. nye ~tee L L Sean, Predict ANGVAl phrch ra peedence Significance of $5 ms F F Regression 3 779193172 ~|2s873,1057 13,8810 _| 6,13216E-09 Residual Fel 2134,0161 194,0015 Total 14 | _80053,3333 Coefficients Standard Error tStat P-value Intercept 406,9381 15,2532 26,6788 0,0000000 Age 4,9111 0,4037 _|_ 12,1640 0,0000001 | Agi Income 0,0512 0,0148 3,4463 0,0054640 Gender 798 | 7.5917 -0,7547 Sluasar we ALBAIO? EM FL) ze Nlome4Sen ddr, C 7 —erD De bet nOu~ usc widen as AO j b ne nethoutt We #Wee aw tt pou Mo de ( } = ANOVA wort Oe ed SS Ms F__|_ Significance F [Regression 7808,8073 | 38904,4 | 207,9962| _4,85815E-10 Residual 2244,5260_| 187,0438 Frcs |e. 80053,3333 mal Standard Coefficients Error t Stat P-value Intercept 407,3534 14,9675 27,2159 | 3,73E-12 i Age 4,9088 0,3964 12,3827 | 3,41€-08 { x * \e Income. ae dD, as Multiple R R Square Adjusted R Square Standard Error 13,6764 Observations 15(a Credit Predicted Observation Age | Income | Score | Credit Score Residuals 1 20 484 546 529,0409 16,9591 s 29 936 601 595,1773 5,8227 3 36 953 610 630,3647 20,3647, 4 65 1549 829 801,6720 27,3280 5 36 1169 643 640,8575, 2,1425 6 34 1591 652 651,5398 0,4602 Z 62 1522 787 785,6341 1,3659 8 40 1202 669 662,0957 6,9043 9 55 1873 775 768,3234 6,6766 10 49 1185 688 705,4490 -17,4490 iL 34 1346 740 737,8140 2,1860 12 44 1521 690 697,2273 -7,2273 13 49 1316 710 711,8127 -1,8127 14 48 1738 720 727,4038 -7,4038 L is 56. 1201 725 740,5878 15,5878 Income Residual Plot Income Age Residual Plot ResidualsHistogram of Residuals SACs. Wie On NW wala Sole (-2,364652889, 15,63534711], {-20,36465289, -2,364652889] (15,63534711, 33,63534711) i) Derive a 90% confidence interval for the coefficient of Income in the last model O.0#8, tt O.cita Cy 0s J 17959 0,048. + 00142(4759) o.0r8e + Qoass 6,0a3! < 6 Enlome 2 0.0t4/a 95% prediction interval for each person in the sample. 508,475 582,2563 619,2710 76,3632 631,1695 632,9678 772,0912 653,7434 752,9753 695,3865 727,4986 686,5836 703,5057 713,3073 726,4751 549,6344 608,0983 641,4583 816,9808 650,5454 670,1118 799,1769 670,4481 783,6714 75,5115 748,1294 707,8709 720,197 741,5004 754,7004 492,8190 562,6982 598,5683 768,1713 609,5239 616,4277 752,9026 631,1490 734,8047 673,9976 706,2807 665,5851 680,3782 694,4394 707,6165 { Wu pete eee. 565,2629 627,6564 662,1610 835,1727 672,1911 686,6519 818,3655 693,0425 801,8421 736,9004 769,3473 728,8694 742,7473 760,3682 73,5591we svasnuuuay, 15 O€ING Offered and the number of students registered in that course is monitored. Supposed the academic year is divided into four quarters: Fall, Winter, Spring and Summer semester. The number of students registered in the course for the last 4 years is recorded in the table below. Quarter 2014 2017 2016 2017 1 (Fall) 42 45 48 52. 2 (Winter) 58 60 68 70 3 (Spring) 51 53. 57 60 4 (Summer) 58 60 68 72 a) Plot the course registration over time and identify the patterns Time Year _| Quarter | Registration 1 204 | ai 42 2 2014 | a2 58 3 2014 | 03 51 4 2014 | aa 58 5 2015 | ai 45 6 2015 | a2 60 7 2015 | a3 53 8 2015 | a4 60 9 2016 | ai 48 10 2016 | a2 68 11 2016 | a3 57 12 2016 | a4 68 B 207 | ai 52 14 2017_| a 70 15 2017_| a3 co | 16 207 [| a | 72 RegistrationDerive a linear model to predict Registration. Describe the model. Predict Registration for the four quarters of 2018. Calculate the corresponding Mean Absolute Deviation. ANOVA, Significance F 482.4265 | 482,4265| 9,6029 | _0,0078 703,3235 | 50,2374 1185,75 mal Coefficients_| Standard Error | __t Stat P-value a Regression 1 Residual 14 Total Intercept 4 3,71689166_| 12,7795 | 4,15€-09 Time 1,1912 3844 3,0989 785 Regression eS Ars +1. (ate Statistics d o c Multiple R R Square Adjusted R Square Standard Error Observations Predictions: Four Jue a of aoe Year 2018 j= 47.5 +1.1912 Time aa EIS a2 68.94 a 70.13 a 71:32 Calculate MADPredicted Observation Registration Residuals Absolute Deviation 49,8824 51,0735 52,2647 53,4559, 54,6471, 2,9706 10,2206 59,4118 11 60,6029 61,7941 62,9853 10,9853 14 64,1765 5,8235 15 65,3676 5,3676 16 66,5588 |—5,4412 5.4412 MAD = 6.0294 c) Derive a linear model to predict Registration using linear trend and seasonality using dummy variables. Use a = 0.05. Calculate the corresponding Mean Absolute Deviation. Predict Registration for the four quarters of 2018. a4 _| Registration 42 58 st 58 a | 60 53 60 48 68 57 68 52 70 60. 2 lala lealg llal la ania lamin me lololo|Hlololo|+lololo|+ |e jolo We will regress Registration on Time, Ql, Q2 and Q3ANOVA of ignificance F Regression 4 289,825 120,5321 Residual 11 26,45 2,404545, Total 15 1185,75 Coefficients | Standard Error tStat P-value Intercept 54,625 1,1630 46,9693 4,9903E-14 Time 0,9875 0,0867 11,3919 | 1,98176-07 aa -14,7875 1,1269 =13,122_ | 4,617E-08 a2 1,475 1,1101 1,3287 0,2108 Q3 -8,2625 1,0999 -7,5120_[_1,1822E-05 Qe Fh 6as +FEFS Hime —\4 FD, 1475 Or -F-20u-Qs Regression Statistics ] Multiple R 0.9888 R Square 0,977 Adjusted P Square 0,9696 Standard Error 15507, Observations 16 Tyear 2018] 74 625 + 0.9875 Time 14.7875 Q1 + 1.475 02-8 262503] Qu 7 | Q2 8 Q3 9 Q4 0 MAD ‘Observation Predicted Registration | Residuals ‘Absolute Residuals 1 40,825 1,175 4175 2 58,075, 0,075 0,075 3 49,325, 1875 1,675 4 58,575 0,575 0575 3 44,775 0,225 0,225 6 62,025, | -2,025 2,025, 7 53,275 I 0.275 0,275 8 62,525, I 2,525 2,525 9 | 48,725, { 0,725 0,725 10 65,975 2,025 2,025 ct 57,225 0225 0,225 2 66,475, 1525 1525 13 52,675 0,675 0,575 14 69,925 0,075 0,075 15 61,175 “1175 1,75 16 70,425 1575 4575 MAD = 1.0344the oldest data and (2) to the intermediate data: 3 * Registration,_, +2 + Registration,_, + 1 + Registration, WMA, = $ Calculate the corresponding Mean Absolute Deviation. Predict Registration for the four quarters of 2018. Absolute Time Registration | WMA,forecast | _ Residuals deviation 1 42 2 58 3 Bie 4 58 51,8333 61667 6,1667 5 45 55,6667 -10,6667 10,6667 6 60 50,3333, 9,6667 9,6667 a 53 54,6667 -1,6667 1,6667 8 60 54,0000 6,0000 6,000 9 48 57,6667 -9,6667 9,6667 10 68 52,8333 15,1667 15,1667 14 57 60,0000 | _-3,0000 3,0000 12 68 59,1667 8,8333 8,8333 13 52 64,3333 -12,3333 12,3333 14 70 58,1667 11,8333, 11,8333 15 60 63,6667 -3,6667 3,667 16 R 62,0000 10,0000 10,0000 _|_ 67,6667 MAD = 8,3590 = Prediction for 2018 Year 2018 1 QI 67,6667 a: Q2 67,6667 Q3 67,6667 Q4 67,6667 We can only predict the first quarter of 2018, and keep the same prediction for the other quaterse) Consider the Exponential Smoothing approach with optimal a. Predict Registration for the four quarters of 2018. Calculate the corresponding Mean Absolute Deviation. The optimal Alpha = 0.361553 Parameters/Options rales aot Biss 2 el Optimize Params Yes 2s pha (! [0361553 ay ay | TRUE : - a} \4 i ee ea (0,95 a ae ees 1 42 N/A N/A 2 58 42 16 16 3 51 47,7848 3,2152 3,215155 1 4 58 48,9473 9,0527 9,052707 5 4s 52,2203 -7,2203 7,220324 6 60 49,6098 10,3902 10,3902 7 33 53,3664 -0,3664 0366403, 8 60 53,2339 6,7661 6,766071 9 48 55,6802 -7,6802 7,680221 i 10 68 52,9034 15,0966 15,09658 rd. rt 57 58,3616 -1,3616 1,361628 i 12 68 57,8693 10,1307 10,13067 zr 3) 13 52 61,5321 9,5321 9,5321 Rete 4 70 58,0857 11,9143 11,91426 15 60 62,3934 -2,3934 2,393376 Cant 16 72 61,5280 10,4720 10,47196 MAD = 8,106) 65,3142 We can only predict the first quarter of 2018, and keep v 65,3142 the same prediction for the other quarters | 65,3142 ] 65,3142Methods MAD Linear Trend 6.0294 Trend and Seasonality 1.0344 Three period Moving Average —__|8.3590 Exponential Smoothing (Optimal Alpha) | 8.1061 Himd and Ararat te b the Geet mol mth Amallot MAD