When we are interested in the relationship between a dependent variable and time, we sometimes use a

Question:

When we are interested in the relationship between a dependent variable and time, we sometimes use a time-trend regression. That is, we use a dependent variable that consists only of the day, month, or year of our observations. A time-trend regression is given by the equation

where t represents time, t = 1,2,3, . . ., T. Suppose we are interested in how Johnson & Johnson’s inventory turnover has changed over time. We collect data on J&J’s inventory turnover for a 20-year period from 1969 to 1988. Use the MINITAB program to answer the following:

(a) Draw a scatter diagram for these data.

(b) Estimate the regression coefficients α and β.

(c) Calculate SSR, SSE, SST, and R², and the standard error of the estimate.

(d) Compute the standard error of

b, and use a t-test to test the significance of b. image text in transcribed