Because shelf space is a limited resource for a retail store, product selection, shelf-space allocation, and shelf-space placement decisions must be made according to a careful analysis of profitability and inventory turnover. The manager of a chain of variety stores wishes to see whether shelf location affects the sales of a canned soup. She believes that placing the product at eye level will result in greater sales than will placing the product on a lower shelf. She observed the number of sales of the product in 40 different stores. Sales were observed over 2 weeks, with product placement at eye level one week and on a lower shelf the other week. Can we conclude that placement of the product at eye level significantly increases sales?
a. Determine the residuals and predicted values.
b. Does it appear that the normality requirement is violated? Explain.
c. Is the variance of the error variable constant? Explain.
d. Determine the coefficient of correlation between the assignment mark and the midterm mark. What does this statistic tell you about the t-tests of the coefficients?