8) Suppose GNC, a vitamin and supplement supplier, would like to investigate the

Question

8) Suppose GNC, a vitamin and supplement supplier, would like to investigate the relationship between the size of an order and the age of the customer who ordered it. This information would allow GNC to target its promotions to specific age groups. The following table shows the ages for seven randomly selected customers along with their most recent order sizes in dollars. Order Size 54 30 Age 41 26 34 54 29 49 63 15 25 3885 a. b. c. Calculate the slope and y-intercept for the regression equation. Predict the order size of a 32-year old customer Provide an interpretation (in words) for the value of the slope

Explanation / Answer

(a) Excel Regression summary output is as follows:

Estimated regression equation:

Order size = 1.5115 + 1.0458 x Age

Intercept = 1.5115

Slope = 1.0458

(b) When Age = 32,

Predicted order size = 1.5115 + (1.0458 x 32) = 1.5115 + 33.4656 = 34.98 ~ 35

(c) The slope coefficient means that, as age increases (decreases) by 1 year, order size increases (decreases) by 1.0458 units.

SUMMARY OUTPUT Regression Statistics Multiple R 0.4131 R Square 0.1706 Adjusted R Square 0.0048 Standard Error 25.7454 Observations 7 ANOVA df SS MS F Significance F Regression 1 681.8808433 681.8808 1.028751 0.356990842 Residual 5 3314.119157 662.8238 Total 6 3996 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 1.5115 41.0877 0.0368 0.9721 -104.1077 107.1307 Age 1.0458 1.0311 1.0143 0.3570 -1.6047 3.6964

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