A jewelry firm wants to submit a bid to purchase a large collection of diamonds but is uncertain how much it should bid You will use the results from a predictive model to make a recommendation on how much the jewelry company should bid for the diamonds Assignment Details A diamond distributor has recently decided to exit the market and has put up a collection of diamonds up for auction Seeing this as a great opportunity to expand its inventory, a jewelry firm is interested in making a bid To determine how much to bid, the firm's analytics department will use a large database of diamond prices to build a linear regression model to predict the price of a diamond based on its attributes As the business analyst, you are tasked to build the linear regression model and apply that model to make a recommendation for how much the company should bid for the entire collection of diamonds To complete this assignment, you will be submitting a file in Word using a report format to provide the answers to the following questions across five steps Step 1 Research and Reflect Step 2 Understanding the Model There are two datasets diamondscontains the data used to build the regression model new diamonds contains the data for the diamonds the company would like to purchase Carat represents the weight of the diamond and is a numerical variable Cut represents the quality of the cut of the diamond, and falls into 5 categories fair, good, very good, ideal, and premium Each of these categories are represented by a number, 1 5, in the Cut Ord variable Clarity represents the internal purity of the diamond, and falls into 8 categories I1, SI2, SI1, VS1, VS2, VVS2, VVS1, and IF Each of these categories are represented by a number, 1 8, in the Clarity Ord variable Step 3 Calculate the predicted price for each diamond Using thenew diamonds dataset, for each diamond, plug in the values for each of the variables into the linear model (equation), then solve the equation to get the estimated, or predicted diamond price Note For this step, simply use the model developed in part three, which does not include the color code information Step 4 Visualize the Data Create two scatter diagrams (or scatter plot) Plot 1 Plot the data for the diamonds in the database, with carat on the x axis and price on the y axis Plot 2 Plot the data for the diamonds for which you are predicting prices with carat on the x axis and predicted price on the y axis Note If you know how, you can also plot both sets of data on the same chart in different colors What strikes you about this comparison After seeing this plot, do you feel confident in the model's ability to predict prices Why or why not Step 5 The Recommendation Now that you have the predicted price for each diamond, it's time to calculate the bid price for the whole set Note The diamond price that the model predicts represents the final retail price the consumer will pay The company generally purchases diamonds from distributors at 70 of that price, so your recommended bid price should represent that What bid do you recommend for the jewelry company Please explain how you arrived at that number

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A jewelry firm wants to submit a bid to purchase a large collection of diamonds but is uncertain how much it should bid. You will

A jewelry firm wants to submit a bid to purchase a large collection of diamonds but is uncertain how much it should bid. You will use the results from a predictive model to make a recommendation on how much the jewelry company should bid for the diamonds.

Assignment Details

A diamond distributor has recently decided to exit the market and has put up a collection of diamonds up for auction. Seeing this as a great opportunity to expand its inventory, a jewelry firm is interested in making a bid. To determine how much to bid, the firm's analytics department will use a large database of diamond prices to build a linear regression model to predict the price of a diamond based on its attributes. As the business analyst, you are tasked to build the linear regression model and apply that model to make a recommendation for how much the company should bid for the entire collection of diamonds.

To complete this assignment, you will be submitting a file in Word using a report format to provide the answers to the following questions across five steps.

Step 1 - Research and Reflect:

Step 2 - Understanding the Model:

There are two datasets.

diamondscontains the data used to build the regression model.
new diamonds contains the data for the diamonds the company would like to purchase.
Caratrepresents the weight of the diamond and is a numerical variable.
Cutrepresents the quality of the cut of the diamond, and falls into 5 categories: fair, good, very good, ideal, and premium. Each of these categories are represented by a number, 1-5, in theCut_Ordvariable.
Clarityrepresents the internal purity of the diamond, and falls into 8 categories: I1, SI2, SI1, VS1, VS2, VVS2, VVS1, and IF. Each of these categories are represented by a number, 1-8, in theClarity_Ordvariable.

Step 3 -Calculate the predicted price for each diamond:Using thenew diamondsdataset, for each diamond, plug in the values for each of the variables into the linear model (equation), then solve the equation to get the estimated, or predicted diamond price.Note: For this step, simply use the model developed in part three, which does not include the color code information. Step 4 -Visualize the Data:Create two scatter diagrams (or scatter plot).

Plot 1 - Plot the data for the diamonds in the database, with carat on the x-axis and price on the y-axis.
Plot 2 - Plot the data for the diamonds for which you are predicting prices with carat on the x-axis and predicted price on the y-axis.
Note: If you know how, you can also plot both sets of data on the same chart in different colors.

What strikes you about this comparison?
After seeing this plot, do you feel confident in the model's ability to predict prices? Why or why not?

Step 5 -The Recommendation:Now that you have the predicted price for each diamond, it's time to calculate the bid price for the whole set. Note: The diamond price that the model predicts represents the final retail price the consumer will pay. The company generally purchases diamonds from distributors at 70% of that price, so your recommended bid price should represent that. What bid do you recommend for the jewelry company? Please explain how you arrived at that number.