Multiple Regression Model Suppose a large consumer product company wants to meas

Question

Multiple Regression Model
Suppose a large consumer product company wants to measure the effectiveness of different types of advertising media in the promotion of its products. Specifically, two types of advertising media are to be considered: (1) radio and TV advertising, and (2) newspaper advertising including the cost of discount coupons. A sample of 22 cities with approximately equal populations is selected for study during a test period of 1 month. Each city is allocated a specific expenditure level for both types of advertising. The sales of the product (in thousands of dollars) and also the level of media expenditure during the test month are recorded as follows:
City
Radio & TV Advertising ($000)
Newspaper Advertising ($000)
Sales ($000)

1
0
40
973

2
0
40
1,119

3
25
25
875

4
25
25
625

5
30
30
910

6
30
30
971

7
35
35
931

8
35
35
1,177

9
40
25
882

10
40
25
982

11
45
45
1,628

12
45
45
1,577

13
50
0
1,044

14
50
0
914

15
55
25
1,329

16
55
25
1,330

17
60
30
1,405

18
60
30
1,436

19
65
35
1,521

20
65
35
1,741

21
70
40
1,866

22
70
40
1,717


Using Megastat correlation/regression or MS EXCEL regression function under TOOLS menu, Data Analysis:
1. Find the coefficient of multiple correlation (R) between sales and advertising costs. Interpret the result. [First, enter advertisement and sales data in Excel. Highlight the y-cell range. Highlight all x-cell ranges at once].
2. Find the coefficient of multiple determination (R2). Interpret the result.
3. State the multiple regression equation.
4. Interpret the meaning of the slopes in the equation.
5. Predict the average sales for a city in which radio and TV advertising is $20,000 and newspaper advertising is $20,000 [use 20 instead of 20,000 in the equation].
6. If you were Director or Marketing, which method of advertising would you use most – TV & radio advertising or newspaper advertising? Why?
7. Is the data free from auto-correlation? [see the value for DW statistic in Excel output]
8. Is the data free from multi-collinearity? [see the values for VIF in Excel output]
9. Do both forms of advertisement have value in explaining variations in sales?

Explanation / Answer

You homework in Excel here: http://rapidshare.com/files/420882780/Homework.xls Please rate

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