An article in the International Journal of Production Economics (Vol. 171, 2016) investigated the factors associated with a firm's supply chain risk management performance (y). Five potential independent variables (all measured quantitatively) were considered: (1) firm size, (2) supplier orientation, (3) supplier dependency, (4) customer orientation, and (5) systemic purchasing. Consider running a stepwise regression to find the best subset of predictors for risk management performance.
a. How many 1-variable models are fit in step 1 of the stepwise regression?
b. Assume supplier orientation is selected in step 1. How many 2-variable models are fit in step 2 of the stepwise regression?
c. Assume systemic purchasing is selected in step 2. How many 3-variable models are fit in step 3 of the stepwise regression?
d. Assume customer orientation is selected in step 3. How many 4-variable models are fit in step 4 of the stepwise regression?
e. Through the first 4 steps of the stepwise regression, determine the total number of t-tests performed. Assuming each test uses an α = .05 level of significance, give an estimate of the probability of at least one Type I error in the stepwise regression.