Question

Bimble now serving as the general manager at a large chain of furniture stores, believes that the experience is a crucial factor in determining the level of success of a salesperson. To examine this belief, Bimble recorded the last month's sales (in $1,000s) and the years of expeirence of 15 randomly selected salespeople.

Salesperson	Years of Experience	Sales
1	5	12
2	1	5
3	13	20
4	10	23
5	8	14
6	0	7
7	2	9
8	10	20
9	3	15
10	8	18
11	5	14
12	12	20
13	7	17
14	20	30
15	15	25

A.) Determine the least-squares regression equation for estimating the monthly sales from years of experience

B.) What is the R² for this model? Interpret the value of R² for Bimble

C.) In a statistical software output, Bimble found the test statistic of t= 12.83 and p < 0.0001 next to the slope value (b₁) of years of experience. What was this t-test for? What should Bimble conclude from this particulat t-test?

D.) Estimate with 95% confidence the average monthly sales of all salespersons with 10 years of experience (Hint: this will be an interval estimation)

Answer 1

Here we need to run regression analysis.

Independent variable (x): Year of experience

Dependent variable (y): Monthly sales

Following is the output of regression analysis:

The least square regression line is:

y' = 7.4324+1.1556x

B)

The R-square of the model is:

It shows that 89.4% of variation in monthly sales is expalined by year of expereince.

C)

This t-test is used to find the whether slope is significant to the model or not.

The p-value is less than 0.0001 so we can conclude that slope is signficant to the model.

d)

The  95% confidence the average monthly sales of all salespersons with 10 years of experience is

(17.614, 20.363)