Discuss the below:
Q1: You will assess the use of various support decision tools and explain why outliers are sometimes called influential observations. Discuss what could happen to the slope of a regression of Y versus a single X when an outlier is included versus when it is not included. Will this necessarily happen when a point is an outlier? You are required to give at least two examples in your response.
Q2: Correlations/Linear & Multiple Regression
A golf club manufacturer is trying to determine how the price of a set of clubs affects the demand for clubs.
Assume the only factor influencing monthly sales is price. Fit the following three curves to these data: linear (Y = a + bX), exponential (Y = abX), and multiplicative (Y = aXb). Which equation fits the data best?
Interpret your best-fitting equation.
Using the best-fitting equation, predict sales during a month in which the price is $470.
| Price |
Demand |
| $400 |
20,000 |
| $420 |
19,000 |
| $440 |
17,000 |
| $460 |
16,000 |
| $500 |
14,000 |
| $380 |
22,000 |
| $290 |
31,000 |
| $340 |
26,000 |
| $220 |
41,000 |
| $700 |
6,000 |
|
|