eyd 04. A fashion boutique in Williamstown, MA hired a statistician who develoge

Question

eyd 04. A fashion boutique in Williamstown, MA hired a statistician who develoge the estimated regression relating investment spending and advenisement spending to All variables are expressed in $1,000 Sales-90+Seinvestment spending+1O adertisement spending a. Predict sales resuting from a s 10,00 Investment spending and 515,090 sverime b. Provide the accurate interpretation of the estimated coins scined h nveimene peadion and advertisement spending, respectively b.1 Interpretation of the estimated coefficient associated with investment spending b. 2. Interpretation of the estimated coefficient associated with advertisement speading will be your advice based on the estimate results of this model? Please motviae yor proped spending decision to increase sales What c. Suppose that the CEO of this fashion boutique asks you to guide her Sales 90+5 investment spending+ 10 advertisement spending

Explanation / Answer

a) Given that

Investment = 10000

Advertisement = 15000

Now prediction of sales = 90 + 5 * 10000 + 10 * 15000 = $2,00,090

b1) If investment increases for every dollar then sale will be increased 5 times, keeping advertisement as constant.

b2) If advertisement spends for every dollar then sales will be increased 10 times, keeping investment as constant.

c) I would advise to CEO to spend of both investment and advertisement in the proportion of 1:2, then sales will be increased as our expectation. These expected values are reliable, since it is based on regression analysis.

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