Guide to Using Excel For Basic Statistical Applications To Accompany Business Statistics: A Decision Making Approach, 7th Ed. Chapter 14: Introduction to Linear Regression and Correlation Analysis By Groebner, Shannon, Fry, & Smith Prentice-Hall Publishing Company Copyright, 2008

Chapter 14 Excel Examples Correlation Coefficient Correlation Coefficient Correlation Coefficient Correlation Coefficient Midwest Distribution Regression Analysis Regression Analysis Fitzpatrick and Associates Regression Analysis Regression Analysis Regression Analysis Regression Analysis Vantage Electronics Regression Analysis for Description Regression Analysis for Description Regression Analysis for Description Regression Analysis for Description Car Mileage

Chapter 14 Excel Examples Regression Analysis for Prediction Regression Analysis for Prediction Regression Analysis for Prediction Regression Analysis for Prediction Freedom Hospital Residual Analysis Residual Analysis Residual Analysis Residual Analysis Freedom Hospital

Correlation Analysis - Midwest Distribution Issue: The company wants to analyze the relationship between salary and years with the company. Objective: Use Excel to help test whether a significant linear relationship exists between salary and years with the company. Data file is Midwest.xls

Correlation Analysis – Midwest Distribution. Open the file Midwest.xls To construct the scatter diagram see the Personal Computers tutorial in Chapter 2.

Correlation Analysis – Midwest Distribution. Select the Data tab Select Data Analysis Select Correlation OK

Correlation Analysis – Midwest Distribution. Input Range = A1:B13 Grouped by Columns Labels in First Row New Worksheet Ply: Correlation

Correlation Analysis – Midwest Distribution. The correlation between Sales and Years with Midwest is

Regression Analysis - Midwest Distribution Issue: The marketing manager wants to determine the relationship between sales and years with the company. Objective: Use Excel to test whether the apparent linear relationship is statistically significant. Data file is Midwest.xls

Regression Analysis – Midwest Distribution. Open the file Midwest.xls

Regression Analysis – Midwest Distribution. Select the Data tab Select Data Analysis Select Regression OK

Regression Analysis – Midwest Distribution. Input Y Range = A1:A13 Input X Range = B1:B13 Select Labels New Worksheet Ply: Correlation OK

Regression Analysis – Midwest Distribution. The output shows: the correlation coefficient the coefficients for the regression equation. for each additional year, the average increase in company sales is = $4,991

Regression Analysis - Fitzpatrick & Associates Issue: The Fitzpatrick analysts want to model the relationship between profits and number of employees. Objective: Use Excel to test whether the apparent linear relationship is statistically significant. Data file is Fortune 50.xls

Regression Analysis – Fitzpatrick & Associates Open the file Fortune50.xls

Regression Analysis – Fitzpatrick & Associates Because you want the Employees to plot on the horizontal axis, it needs to be to the left of Profit. To accomplish this, copy Column D to Column K. Select the Insert Tab Select Scatter chart Select the Scatter with only Markers

Regression Analysis – Fitzpatrick & Associates Add titles Delete Legend Move chart to new sheet titled Scatter plot

Regression Analysis – Fitzpatrick & Associates To find Regression: Return to the Data Sheet Select the Data tab Select Regression OK

Regression Analysis – Fitzpatrick & Associates Y Range = K3:K53 X Range = J3:J53 New Worksheet Ply OK

Regression Analysis – Fitzpatrick & Associates Output Shows R square and Coefficients

Regression Analysis for Vantage Electronics Issue: Analysts want to compare the effectiveness of the Vantage Sensor - Vanguard against its competitor, Scorpion. Objective: Use Excel to test whether the apparent linear relationship is statistically significant. Data file is Vanguard.xls

Regression Analysis for Vantage Electronics Using the procedures from this chapter Create a Scatter Plot Note: Copy the Scorpion data to the column to the right of the Vantage data. Add titles, delete legend, and move to a new sheet.

Regression Analysis for Vantage Electronics The resulting model will give you the regression coefficient and the slope

Regression Analysis for Description- Car Mileage Issue: Analysts want to determine the relationship between EPA highway mileage and automobile horsepower. Objective: Use Excel to test whether the apparent linear relationship is statistically significant. Data file is Automobiles.xls

Regression Analysis – Car Mileage Open the file Automobiles.xls Select the Data tab Select Data Analysis Select Regression OK

Regression Analysis – Car Mileage Input Y Range: B1:B31 Input X Range: F1:F31 Select Labels New Worksheet Ply: Auto OK

Regression Analysis – Car Mileage The output shows the coefficient of determination the coefficients for the regression equation.

Regression Analysis for Prediction - Freedom Hospital Issue: The administrator has been requested by the hospital’s board of directors to develop a model that can be used to predict the total charges for a geriatric patient. Objective: Use Excel to develop a statistically significant prediction model. Data file is Patients.xls

Regression Analysis for Prediction – Freedom Hospital Open the file Patients.xls Select the Data tab Select Data Analysis Select Regression OK

Regression Analysis for Prediction – Freedom Hospital Input Y Range: G1:G139 Input X Range: B1: B139 Select Labels New Worksheet Ply: Patients OK

Regression Analysis for Prediction – Freedom Hospital The Excel output shows the coefficient of determination and the coefficients of the linear regression model.

Issue: The administrators want to determine whether the prediction model developed is a valid use of regression analysis or whether it violates some of the necessary assumptions. Objective: Use Excel to analyze the residuals from the model. Data file is Patients.xls Residual Analysis - Freedom Hospital

Residual Analysis – Freedom Hospital In the Patients Data sheet: Select the Data tab Select Data Analysis Select Regression

Residual Analysis – Freedom Hospital Input Y Range: G1:G139 Input X Range: B1:B139 Select Labels Select Residuals Select Residual Plots OK

Residual Analysis – Freedom Hospital At the bottom of the regression output (note the row number) the residual for each observation is given.

Residual Analysis – Freedom Hospital The regression output will also plot the residuals.