Scribd
Upload
129 views10 pages

Random Motors Project Submission: Name - Apoorva Modi

There is no change in the Adjusted R-square value between the original and rebuilt regression models because none of the variables were statistically insignificant based on their p-values. The Adjusted R-square value captures how well the model fits the data, taking into account the number of predictors in the model. Removing variables that are not statistically significant from the model would not impact the Adjusted R-square value, as those variables were not contributing explanatory power to the model to begin with. Keeping only the statistically significant variables helps simplify the model without loss of explanatory power.

Uploaded by

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

Random Motors Project Submission: Name - Apoorva Modi

There is no change in the Adjusted R-square value between the original and rebuilt regression models because none of the variables were statistically insignificant based on their p-values. The Adjusted R-square value captures how well the model fits the data, taking into account the number of predictors in the model. Removing variables that are not statistically significant from the model would not impact the Adjusted R-square value, as those variables were not contributing explanatory power to the model to begin with. Keeping only the statistically significant variables helps simplify the model without loss of explanatory power.

Uploaded by

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

Random Motors Project

Submission
Name – Apoorva Modi
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(µ) = 22 Km/Litre Mileage HO : Mean(µ) = 15 Km/Litre

Top speed HO : Mean(µ) = 140 Km/hr Top speed HO : Mean(µ) = 210 Km/Litre
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(µ) ≠ 22 Km/Litre Mileage H1 : Mean(µ) ≠ 15 Km/Litre

Top speed H1 : Mean(µ) ≠ 140 Km/hr Top speed H1 : Mean(µ) ≠ 210 Km/Litre
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 = 0.0822 For Rocinante 36: Since p value for
p-value for top speed = 0.4316 mileage and top speed is greater than
0.05, we fail to reject the Null
For Marengo32: Hypothesis (Ho)

For Marengo 32: Since p value for


p-value for mileage = 0.1342
mileage and top speed is greater than
p-value for top speed = 0.373 0.05, we fail to reject the Null
Hypothesis (Ho)
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:
The Type 2 (β) error is more expensive
Type 2 (β): When we fail to reject Ho for the reason that this would result
when Ho is false in selling vehicles to customers with a
wrong specification which would
result in customer complaints, bad
reputation and losses due to refund
claims
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 Rocinante Develop the regression equation for the Marengo
models and Predict the number of unit sales of models and Predict the number of unit sales of
Rocinante36 model? Marengo32 model?

Regression coefficients Regression coefficients

Price: -0.79503 Price: -0.18673

Mileage: 8.306331 Mileage: 0.041301

Top speed: -0.01857 Top speed: 0.220802

Equation: Sales = 50.723 - 0.795*Price + 8.306*Mileage Equation: Sales = -13.447 - 0.186*Price + 0.22*Top Speed

Predicted Sales(in units): 227890 (considering sales in Predicted Sales(in units): 25127(considering sales in
multiple of 1000 as mentioned in Exhibit 2) multiple of 1000 as mentioned in Exhibit 2)
Q-5) Based on sales prediction, what is the overall predicted profit for
Rocinante36 model and Marengo32 model ?

Overall predicted profit

Rocinante36 Model: The profit for Marengo 32 is worked out to be Rs 227890 Lakhs

Marengo32 Model: The profit for Marengo 32 is worked out to be Rs 201016 Lakhs
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?

The profit for Rocinante 36 model worked out to be Rs 227890 lakh which is higher than
Marengo 32 model. Hence, we would invest in Rocinante 36 model
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?

Sales of Rocinante 36 (@ Rs 7 lakh Selling Price) = 227890


Sales of Rocinante 36 (@ Rs 8 lakh Selling Price) = 227095
Sales of Marengo 32 (@ Rs 41 lakh Selling Price) = 25127
Sales of Marengo 32 (@ Rs 42 lakh Selling Price) = 24941

On increase of price by Rs 1 lakh, the Sales of Rocinante 36 is more impacted (795 units) as
compared to Marengo 32 (186 units). This is because the weightage of Price Coefficient for
Rocinante 36 is more than Marengo 32.
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?

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