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Advanced Mathematics for
Business
Topic 8:
Regression Analysis 2
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Regression Analysis 2 Topic 8 - 8.2
Scope and Coverage
This topic will cover:
Regression using software
Multiple linear regression
- Extending regression models with dumm varia!les
- "nterpreting models
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Regression Analysis 2 Topic 8 - 8.
#earning $utcomes
By the end of this topic students will be able to:
Evaluate results from regression analsis
"nterpret results from regression analsis
Recognise the possi!ilit to extend regression
analsis
- %umm varia!les
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Regression Analysis 2 Topic 8 - 8.!
&he Simple #inear Model - '
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Regression Analysis 2 Topic 8 - 8."
x y
() '*++
), )*)
.) '+*/+
',, /*0+
x y
() 1*,.
), )*/+
.) 0*/1
',, ',*(/
&he Simple #inear Model - (
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Regression Analysis 2 Topic 8 - 8.#
Regression 2sing Software
Man software pac3ages- $pen$ffice4 5retl
- MS Excel
-S6SS4 Minita!4 SAS- R4 S
MS Excel
- (,,.7(,', %ata7%ata Analsis7Regression
- $lder &ools7%ata Analsis7 Regression
&hen all versions are similar
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Regression Analysis 2 Topic 8 - 8.$
"s Model 2seful in 8orecasting9 - '
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Regression Analysis 2 Topic 8 - 8.8
"s Model 2seful in 8orecasting9 - (
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Regression Analysis 2 Topic 8 - 8.%
&he "nsignificant Constant Reasons :ot to Set Constant &erm to ;ero
- It prevents model being biased
- 2suall interested in the predictor varia!les anwa
-
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Regression Analysis 2 Topic 8 - 8.10
"s Model 2seful in 8orecasting9 - 1
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Regression Analysis 2 Topic 8 - 8.11
Multiple #inear Regression - '
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Regression Analysis 2 Topic 8 - 8.12
Multiple #inear Regression - (
Estate agent ?realtor@ is esta!lishing an office in a
new location
ishes to !uild a model of advertised prices
Collects competitor data on- "nternal area
- #and
- %istance from nearest school- Cit region
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Regression Analysis 2 Topic 8 - 8.1
ExampleProperty Price School Land Area District
' +). 1 '.0' '/) 8%
( +. ' ,, '.. 8%
1 (' 1 .)0 0+ 8%
+ 1,, + (0 '1. 8%
) 1) ( /1, '', AC/ /) ' /)) (,' AC
. +,( ( 000 ) AC
)+' ( 0(, '+/ AC
0 1) 1 '') ''( $ther
', +++ ' .. ')) $ther
'' (0 1 )0. ', $ther '( +/( ' '++. (,, $ther
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Regression Analysis 2 Topic 8 - 8.1!
%umm aria!lesProperty Price School Land Area AC FD District
' +). 1 '.0' '/) , ' 8%
( +. ' ,, '.. , ' 8%
1 (' 1 .)0 0+ , ' 8%
+ 1,, + (0 '1. , ' 8%
) 1) ( /1, '', ' , AC/ /) ' /)) (,' ' , AC
. +,( ( 000 ) ' , AC
)+' ( 0(, '+/ ' , AC
0 1) 1 '') ''( , , $ther
', +++ ' .. ')) , , $ther
'' (0 1 )0. ', , , $ther '( +/( ' '++. (,, , , $ther
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Regression Analysis 2 Topic 8 - 8.1"
&he Model "dea
price D
constant
x ?3m from a school@
x ?land in m(@
x ?floor area in m(@
?if in AC@
?if in 8%@
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Regression Analysis 2 Topic 8 - 8.1#
Enter %ata into Software - '
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Regression Analysis 2 Topic 8 - 8.1$
Enter %ata into Software - (
:ew or3sheet
Response
6redictors
i l i 2 i 8 8 8
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Regression Analysis 2 Topic 8 - 8.18
Model $utput - '
R i A l i 2 T i 8 8 1%
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Regression Analysis 2 Topic 8 - 8.1%
R(and AdFusted R(
R i A l i 2 T i 8 8 20
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Regression Analysis 2 Topic 8 - 8.20
Model $utput - (
Regression Analysis 2 Topic 8 8 21
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Regression Analysis 2 Topic 8 - 8.21
Model $utput - 1
Regression Analysis 2 Topic 8 8 22
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Regression Analysis 2 Topic 8 - 8.22
Model $utput - +
Regression Analysis 2 Topic 8 8 2
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Regression Analysis 2 Topic 8 - 8.2
Model $utput - )
Regression Analysis 2 Topic 8 8 2!
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Regression Analysis 2 Topic 8 - 8.2!
&he Model
EGuation
- expected price D +)*.( ((*'.0 x area@ ?'+* xAC@
Suppose propert is in AC and is of ',,m(what is
expected advertised price9
- expected price D +)*.( ((*'.0 x ',,@ ?'+* x '@
- expected price D +'(*+(
Regression Analysis 2 Topic 8 - 8 2"
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Regression Analysis 2 Topic 8 - 8.2"
Recap
By the end of this topic students will be able to:
Evaluate results from regression analsis
"nterpret results from regression analsis
Recogni>e possi!ilit to extend regression analsis
- %umm varia!les
Regression Analysis 2 Topic 8 - 8 2#
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Regression Analysis 2 Topic 8 8.2#
Bi!liograph
Hinton4 6R* Statistics Explained* Routledge
Ieast4 S* and &owler M* Rational ecision !a"ing
for !anagers#ile
isniews3i4 M* $uantitative !ethods for ecision!a"ers#8& 6rentice Hall
Regression Analysis 2 Topic 8 - 8 2$
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Regression Analysis 2 Topic 8 8.2$
&opic J Regression Analsis (
Any $uestions%