Question

A national chain of women’s clothing stores with locations in the large shopping malls thinks that it can do a better job of planning more renovations and expansions if it understands what variables impact sales. It plans a small pilot study on stores in 25 different mall locations. The data it collects consist of monthly sales, store size (sq. ft), number of linear feet of window display, number of competitors located in mall, size of the mall (sq. ft),and distance to nearest competitor (ft).

1. Write a memo reporting your findings to your boss. Identify the strengths and weaknesses of the model you have chosen.

Sales	Size	Windows	Competitors	Mall Size	Nearest Competitor
4453	3860	39	12	943700	227
4770	4150	41	15	532500	142
4821	3880	39	15	390500	263
4912	4000	39	13	545500	219
4774	4140	40	10	329600	232
4638	4370	48	14	802600	257
4076	3570	37	16	463300	241
3967	3870	39	16	855200	220
4000	4020	44	21	443000	188
4379	3990	38	16	613400	209
5761	4930	50	15	420300	220
3561	3540	34	15	626700	167
4145	3950	36	14	601500	187
4406	3770	36	12	593000	199
4972	3940	38	11	347100	204
4414	3590	35	10	355900	146
4363	4090	38	13	490100	206
4499	4580	45	16	649200	144
3573	3580	35	18	685900	178
5287	4380	42	15	106200	149
5339	4330	40	10	354900	231
4656	4060	37	11	598700	225
3943	3380	34	16	381800	163
5121	4760	44	17	597900	224
4557	3800	36	14	745300	195

Answer 1

The correlation matrix is:

	Sales	Size	Windows	Competitors	Mall Size	Nearest Competitor
Sales	1.000
Size	.762	1.000
Windows	.603	.877	1.000
Competitors	-.377	.029	.234	1.000
Mall Size	-.412	-.108	-.023	.151	1.000
Nearest Competitor	.256	.164	.227	-.182	.208	1.000
	25	sample size
	± .396	critical value of r .05 (two-tail)
	± .505	critical value of r .01 (two-tail)

There is a strong positive relationship between Size and Windows.

There is a strong positive relationship between Size and Sales.

There is a strong positive relationship between Sales and Windows.

There is a weak positive relationship between Size and Competitors.