Question

Management proposed the following regression model to predict sales at a fast-food outlet. y Po+ BBx, +B,x, +e where number of competitors within one mile x, x2 population within one mile (1000s) drive-up window present l0 otherwise y sales ($1000s) The following estimated regression equation was developed after 20 outlets were surveyed. i-10.5-4.3 +6.2 +15.5z3 a. What is the expected amount of sales attributable to the drive-up window? b. Predict sales for a store with two competitors, a population of 9,000 within one mile, and no drive-up window. Estimate of sales = $ c. Predict sales for a store with one competitor, a population of 3,000 within one mile, and a drive-up window. Estimate of sales = $

Answer 1

a. Sales in thousands =10.5+15.5*1 = $ 26 thousands

b. Y =10.5-4.3*2+6.2*9000+15.5*0 = $ 55801.9 thousands

c. Y =10.5-4.3*1+6.2*3000+15.5*1 = $ 18621.7 thousands