The manager of a chain of furniture stores believes that experience is the most important factor in determining the level of success of a salesperson. To examine this belief he records last month's sales and the years of experience for 30 randomly selected salespeople. The linear regression output to predict Monthly Sales (in $1,000s) based on Years of Experience is:

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.6921
R Square	0.479
Observations	30
		Coefficients		Standard Error	t Stat			P-value				Lower 95%				Upper 95%
Intercept		18.5		4.608	4.017			0.0004				9.1				27.9
Years of Experience		1.82		0.3587	5.074			0.0000				1.09				2.55

a) Construct a 90% confidence interval for the population slope

b) One of your salespeople with 12 years of experience had $25,000 in sales last month. Is this low for a salesperson with 12 years of experience? Explain using the regression line.

c) Interpret r² (the coefficient of determination) using the words of the problem.

d)

(a) Is there enough evidence to conclude there is a linear relationship between monthly sales and years of experience? Test at the 5% significance level (95% confidence level).

H₀ H_A

Apply a Rule + Decision