Analytical Methods

Paper instructions:

Deciding where to locate a new retail store is one of the most important decisions that a manager can make. The manager

of a chain of video rental store hires you as an expert in business analysis and wants you to help him select a location for

a new store. The manager informs you that he would like to use annual gross revenue as a measure of success. As the project

commences, you decide to conduct a regression analysis and find that the determination of success depends on the following

variables:

-Number of people living within1 km of the store (PEOPLE)?
-Mean income of the households within 1 km of the store (INCOME)
-Number of competitors within 1 km of the store (COMPTORS)
-Rental price of a newly released movie (PRICE)

You randomly select 50 video stores and record the value of each of the variables listed above plus annual gross revenue

(REVENUE). This data is provided in the file Assignment.data.

(i)  Report the summary statistics of the variables selected as determinants of success of a store. Briefly explain the

distributions of these variables and what these tell you about the underlying data. (4 marks)

(ii)  Represent the regression model you want to estimate and provide clear justification of your preferred estimation

method of the model. (4 marks)

(iii) Report your estimated model and explain how PEOPLE, INCOME, COMPTORS and PRICE affect the dependent variable? (4

marks)

(iv) Which independent variable(s) significantly explain the dependent variable? Show your work. (4 marks)

(v)  Based on your estimated model, predict the gross annual revenue of a store for the mean value of the variables

PEOPLE, INCOME, COMPTORS and PRICE. What do you observe? (4 marks)

(vi)  What is the coefficient of determination adjusted for degrees of freedom….Questions continued in file

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