Scribd
Upload
96 views10 pages

Random Motors Project

The document contains the responses to questions regarding a regression analysis and hypothesis testing performed on two new car models, Rocinante36 and Marengo32, to determine if they meet design specifications. Key findings are: - Hypothesis tests find that the models meet mileage and top speed specifications. - Regression analysis predicts Rocinante36 will outsell Marengo32 and be more profitable. - Rocinante36 sales would be more impacted by a price increase compared to Marengo32. - Adjusted R-squared values slightly increase when insignificant variables are removed from the regression models.

Uploaded by

Saleh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
96 views10 pages

Random Motors Project

The document contains the responses to questions regarding a regression analysis and hypothesis testing performed on two new car models, Rocinante36 and Marengo32, to determine if they meet design specifications. Key findings are: - Hypothesis tests find that the models meet mileage and top speed specifications. - Regression analysis predicts Rocinante36 will outsell Marengo32 and be more profitable. - Rocinante36 sales would be more impacted by a price increase compared to Marengo32. - Adjusted R-squared values slightly increase when insignificant variables are removed from the regression models.

Uploaded by

Saleh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 10

Random Motors Project

Submission
Name – Saleh Adel Bashanfar
Q-1a) Formulate the null hypotheses to check whether the new models are
performing as per the desired design specifications.

For Rocinante36: For Marengo32:

Mileage HO : Mean = 22 km/litre Mileage HO : Mean = 15 km/hr

Top speed HO : Mean = 140 km/hr Top speed HO : Mean = 210 km/hr
Q-1b) Formulate the alternate hypotheses to check whether the new models
are performing as per the desired design specifications.

For Rocinante36: For Marengo32:

Mileage H1 : Mean ≠ 22 km/litre Mileage H1 : Mean ≠ 15km/hr

Top speed H1 : Mean ≠ 140 km/hr Top speed H1 : Mean ≠ 210 km/hr
Q-2) In order to comment on whether the design specifications are being
matched or not, perform relevant hypothesis tests and calculate the p-value for
each. What will you conclude? Assume you are performing the tests at 95%
confidence level.
For Rocinante36: Conclusion

p-value for mileage = 0.822 • Assuming Significance Level of 0.05 (ɑ) at


95% Confidence Interval, it can be stated
p-value for top speed = 0.416 that in all the 4 scenarios for both the
models the p-value > alpha.
For Marengo32: • Thus, we will fail to reject the Null
hypothesis in all the 4 scenarios for both
the models.
p-value for mileage = 0.1342 • Hence, we will fail to challenge the
p-value for top speed = 0.373 company’s promised specifications.
Q-3) You have learnt about the possible errors that might result from the
hypothesis tests. What type of error is more expensive for Random motors
based on the hypothesis they are testing? Why? Assume that you need to
refund all your customers if your cars deviate from specifications.
The type of error which is more Reason:

expensive: Type 1 error, when we reject the null


hypothesis which is true, then the company
• Type 2 error is more expensive will just have to invest more in R&D for its
model. Type 2 error, when we fail to reject
the null hypothesis and is false which means
not provide the promised specifications, then
the company will not only suffer a huge
negative publicity hampering its brand image
but will also be obliged to refund all their
customers.
Q-4) Develop a regression equation for each model at 95 percent confidence
level. From the regression equation predict the sales of the two models.
Develop the regression equation for the Develop the regression equation for the
Rocinante models and Predict the number Marengo models and Predict the number of
of unit sales of Rocinante36 model? unit sales of Marengo32 model?

Regression coefficients Regression coefficients


Price: - 0.7950 Price: 0.1867
Mileage: 8.3063 Mileage: 0
Top speed: 0 Top speed: 0.2208
Equation: Predicted sales (Y ) = Equation: Predicted sales (Y) = -13.44764889
50.72312718 + (- 0.795026441*Price) + + (- 0.186728172* Price) +
(8.306331092*Mileage) (0.220801682*Speed)
Predicted Sales(in units): 227897 Predicted Sales(in units): 25265
Q-5) Based on sales prediction, what is the overall predicted profit for
Rocinante36 model and Marengo32 model ?

Overall predicted profit

Rocinante36 Model: ₹ 227897

Marengo32 Model: ₹ 202119


Q-6) As a CEO, you wish to invest only in the model which is predicted to be
more profitable. Which model among Rocinante36 and Marengo32 will you
invest in?

Which model you will invest in?

As a CEO, on the basis of predicted profit of both the models, Rocinante36 is


the model to make an investment into as this model is more profitanle
compared to Marengo32.
Q-7) Now you must have derived the regression equation for both models, Rocinante and
Marengo. Now if you increase the price of Rocinante36 and Marengo32 by 1 lac rupees
each, which car will have a higher impact on the sales due to increase in price? Give proper
logic for your answer. You can consider that all other specifications such as mileage and top
speed remain the same for both models.

Which car is most affected by a price increase? Why?

With an increase in price of 1 lakh for each model:


Rocinante36 Model Marengo32
Model Previous Sales Figure : 227897 ( units). Previous Sales figure: 25265( units)
New Sales Figure : 227102 ( units ) New sales figure : 25078 ( units)
Difference in Sales : -795 units Difference in sales : -186 units

As we can see with the increase in price, Rocinante36 is having more impact on its
sales hampering its sales count when compared to Marengo32 model
Q-8) After developing the regression equation for both models (Rocinante and Marengo), if you
analyse the p values for coefficients in the regression results, you will notice that some of the
regression variables (top speed, mileage and price) are insignificant. Remove the insignificant
regression variables from your selection and rebuild the regression model using only significant
variables. Compare the Adjusted R square value for the new and old regression model. Do you
notice any change in Adjusted R square value? If yes, explain the reason for the change.

Is there a change on Adjusted R square Value? If so, Why?


Rocinante36
Adjusted R Square Value (Old Regression Model) : 0.99535604
Adjusted R Square Value (New Regression Model) : 0.99544756

Marengo 32
Adjusted R Square Value (Old Regression Model) : 0.84787522
Adjusted R Square Value (New Regression Model) : 0.85309121

In the New Regression model, there is a slight increase in the Adjusted R Square values for both the models.
Considering only significant independent variables in the new regression model shows that it is improving the Adjusted R Square
value because the Adjusted R square value increases when the considered independent variable is improving the model

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy