An Internet-Based Retail Company That Specializes in Audio and Visual

question 5

Essay

An Internet-based retail company that specializes in audio and visual equipment is interested in creating a model to determine the amount of money, in dollars, its customers will spend purchasing products from them in the coming year. In order to create a reliable model, this company has tracked a number of variables on its customers. Below you will find the Excel output related to several of these variables. This company has tried using the customer's annual salary for entire household , the number of children in the household , and if the customer purchased merchandise from them in the previous year ( in 2015).
-(A) Estimate the regression model. How well does this model fit the data?
​
(B) Is there a linear relationship between the explanatory variables and the dependent variable? Explain how you arrived at your answer at the 5% significance level.
​
(C) Use the estimated regression model to predict the amount of money a customer will spend if their annual salary is $45,000, they have 1 child and they were a customer that purchased merchandise in the previous year (2015).
​
(D) Find a 95% prediction interval for the point prediction calculated in (C). Use a t-multiple = 2.02.
​
(E) Find a 95% confidence interval for the amount of money spent by all customers sharing the characteristics described in (C). Use a t-multiple = 2.02.
​
(F) How do you explain the differences between the widths of the intervals in (D) and (E)?

---

Definitions:

Competitive Play

A form of play that involves rivalry between participants, governed by rules and often aiming towards a win/lose outcome.

Rigorous Tennis

A highly disciplined and physically demanding approach to playing tennis, often involving intensive training and strategy.

Interviewer Illusion

A cognitive bias occurring in interviews where the interviewer overestimates their ability to evaluate the interviewee objectively.

Enduring Personality

Traits and characteristics of an individual's personality that remain stable over time and across situations.