Question 5(7 marks)

Yummy Lunch Restaurant needs to decide the most profitable location for their business expansion. Marketing manager plans to use a multiple regression model to achieve their target. His model considers yearly revenue as the dependent variable. He found that number of people within 2KM (People), Mean household income(income), no of competitors and price as explanatory variables of company yearly revenue.

The following is the descriptive statistics and regression output from Excel.

Revenue

People

Income

Competitors

Price

Mean

343965.68

5970.26

41522.96

2.8

5.68

Standard Error

5307.89863

139.0845281

582.1376385

0.142857

0.051030203

Median

345166.5

6032

41339.5

3

5.75

Mode

#N/A

5917

#N/A

3

6

Standard Deviation

37532.51115

983.47613

4116.334718

1.010153

0.360838027

Sample Variance

1408689393

967225.2984

16944211.51

1.020408

0.130204082

Sum

17198284

298513

2076148

140

284

Count

50

50

50

50

50

SUMMARY OUTPUT

Regression Statistics

Multiple R

0.77

R Square

A

Adjusted R Square

B

Standard Error

25139.79

Observations

50.00

ANOVA

df

SS

MS

F

Significance F

Regression

C

40585376295

F

H

3.0831E-08

Residual

D

28440403984

G

Total

E

69025780279

Coefficients

Standard Error

t Stat

P-value

Intercept

-68363.1524

78524.7251

-0.8706

0.3886

People

6.4394

3.7051

I

0.0891

Income

7.2723

0.9358

J

0.0000

Competitors

-6709.4320

3818.5426

K

0.0857

Price

15968.7648

10219.0263

L

0.1251

You are required to;

a.Complete the missing entries from A to L in this output (2 marks)

ANSWER:

b.Derive the regression model(1 mark)

ANSWER:

c.What does the standard error of estimate tell you about the model?(1 mark)

ANSWER:

d.Assess the independent variables significance at 5% level (develop hypothesis if necessary in the analysis)? (3 marks)