5. After you estimate the regression, how do you plan to decide whether the estimated regression is adequate?

How might the regression results be inadequate?

What do you plan to do if the results are inadequate? Upper-level managers frequently make important longrun strategic decisions about acquisitions, mergers, plant or store locations, pricing, financing, and marketing.

Indeed, a major focus of this book is to explain how managers can use economic principles as a guide to making these types of decisions. But even the best guidance can fail without adequate information and data analysis.

Company analysts often use regression analysis to help them provide quantitative information to managerial decision makers. In this chapter, you learned how regression analysis can help managers estimate demand functions. But regression can be used to help managers answer other questions, such as these: How many more units of a product will we sell if our store stays open an extra hour each day? Is San Diego a good location to open a new store? How will consumers react if we change the packaging of our product? In this case study, we explore how regression analysis can help provide invaluable information about another important managerial issue, whether to remodel the company’s stores and/or change how the company prices its products.