A sales manager collected the following data on annual sales and years of experience.
Sales Person Years of Experience Annual Sales ($1,000s)
1 1 80
2 3 97
3 4 92
4 4 102
5 6 103
6 8 111
7 10 119
8 10 123
9 11 117
a. Develop a scatter diagram for these data with years of experience as the independent variable.
b. Develop an estimated regression equation that can be used to predict annual sales given the years of experience.
c. Use the estimated regression equation to predict annual sales for a salesperson with 9 years of experience.
d. Compute SST, SSR, and SSE.
e. Compute the coefficient of determination r2. Comment on the goodness of fit.
f. What is the value of the sample correlation coefficient?
g. Compute the residuals and construct a residual plot for this problem.
h. Do the assumptions about the error terms seem reasonable in light of the residual plot?