Provide the correct explanation.

The COO of a retail pharmacy chain is concerned about inventory record inaccuracy and installs RFID technology in some retail outlets to correct the situation. To understand whether the new technology indeed reduced inaccuracies he asks an analyst to study the dataset of 43 retail stores collected at the end of a fiscal year when physical inventory was checked. The analyst runs the following regression model (at the store level) on the dataset:

Response variable (Y): %inaccuracy in inventory records

Predictor variables (X): number of SKUs, on-hand inventory for each SKU, total on-hand inventory overall SKUs, RFID (a dummy variable, which equals 1 if the store has RFID technology and equals 0 if not), and the number of employees.

Which of the following statements is TRUE in the context of this model?

a. Multicollinearity is a concern and it can be detected by running regressions of one predictor variable at a time against all other predictor variables

b. Multicollinearity is not a concern since we have categorical predictor variables

c. Multicollinearity is not a concern because there are no interaction variables among the predictor variables

d. The coefficient of RFID, gives us a point estimate of the %inaccuracy of inventory records, on average, in stores with RFID technology