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Asked Dec 4, 2019
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What are some examples of ways in which  linear regression to create a beneficial statistical outcome, in a business setting?

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Expert Answer

Step 1

Linear Regression:

Linear regression is a method used to establish a relationship between the dependent variable for example income and the independent variables (age, experience and occupation). As the name suggest linear, the relationship between the dependent and independent variables will be linear in nature. That is, for a unit increase in the independent variable there is a unit increase in the dependent variable.

The linear regression equation is,

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y = B, + B,x

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Step 2

Where,

β0 represents the intercept.

β1 represent the slope coefficient corresponding to x.

A linear regression equation may contain n number of independent variables.

Step 3

Examples of linear regression in business setting:

Assume that a clothing company manager is interested to predict the sales for the upcoming year. The past sales data were collected. The dependent variable is sales in thousand dollars per month. The independent variables would be number of outlets, size of the outlet, parking facility, number of staffs, segments covered (men, women and kids).

Using these variables and also other variables, a linear regression model is constructed to establish a relationship between sales and the independent variables. The analysis would result in a reg...

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