Assignment:
Kramer Smith Case
Kramer Smith owns a dry-cleaning service and is thinking about changing his advertising expenditures for the year. He hires you as a consultant to determine the relationship between sales, consumer incomes, and advertising by means of multiple regression analysis.
Smith has gathered the sales, income, and advertising data for the last year, as shown in Table
|
Month
|
Advertising ($)
|
Sales
($)
|
Consumer Income ($)
|
|
January
|
10,000
|
43,000
|
41,000
|
|
February
|
9,000
|
40,500
|
43,000
|
|
March
|
11,000
|
41,000
|
45,000
|
|
April
|
12,000
|
45,900
|
47,000
|
|
May
|
11,000
|
47,000
|
49,000
|
|
June
|
12,000
|
51,000
|
51,000
|
|
July
|
13,000
|
54,000
|
53,000
|
|
August
|
13,000
|
57,000
|
55,000
|
|
September
|
14,000
|
56,000
|
57,000
|
|
October
|
15,000
|
60,000
|
58,000
|
|
November
|
15,800
|
61,000
|
59,000
|
|
December
|
16,700
|
63,000
|
61,000
|
Create a report answering the following questions:
Construct a scatter graph showing the advertising and sales relationship over the last twelve months.
Using multiple regression, conduct an analysis of the firm's sales revenue, consumer incomes, and advertising.D
escribe how you would explain your results to Smith and what recommendations you would suggest.
Summarize your recommendations or advice to Smith concerning the relationship between sales, income, and advertising.