The Following Regression Model Has Been Proposed to Predict Sales $\hat { Y }$

question 83

Short Answer

The following regression model has been proposed to predict sales at a fast food outlet.
$\hat { Y }$ =18 - 2X1+7X2+15X3
where
X1 = the number of competitors within 1 mile X2 = the population within 1 mile
X3 = 1 if drive-up windows are present, 0 if otherwise
$\hat { Y }$ = sales in $1,000s)
a. What is the interpretation of 15 the coefficient of X3) in the regression equation?
b. Predict sales for a store with 2 competitors, a population of 10,000 within one mile, and one drive-up window give the answer in dollars).
c. Predict sales for the store with 2 competitors, a population of 10,000 within one mile, and no drive-up window give the answer in dollars).

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Definitions:

Other Expenses

Expenses not directly tied to the production of goods or services, such as administrative and selling expenses.

Budgeting

The practice of formulating a budget to dictate how you’ll use your money, identifying prospective financial aims and the approaches to attain them.

Activity Variance

The gap between planned activity levels and actual outcomes in any sphere of operations, reflecting operational efficiency and planning accuracy.

Selling And Administrative Expenses

Costs related to sales activities and general management of a business, excluding production costs.