SMMD Assignment 4

Ramashis Biswas | PGID: 61510121 | Ramashis_Biswas2015@isb.edu

Answer 1:

From the scatterplot, the store area and monthly sales:

i.
ii.
iii.

Have an approximately linear relationship.

The relationship is positive
We cannot estimate the absolute strength of the relationship. If we had a
scatterplot which depicted a relationship with another variable we could have said
which relationship was stronger.

Answer 2:

The linear relationship is given as above. The relationship suggests that:

1. Monthly sales of at least 32k is not related to the store area.
2. For an increase of 1 sq ft area of the store, sales are expected to increase by 311.

SMMD Assignment 4
Ramashis Biswas | PGID: 61510121 | Ramashis_Biswas2015@isb.edu

Answer 3:

From the data set, Correl (Store Size, Monthly Sales) = 0.81 and R2 = 0.65. Thus
approximately 65% of the variance in the Store Sales can be explained by the variation in
Store size. Thus we can say that store sales is definitely related to the store area.
Also, from the t-value, at 95% confidence level, there is less than .0001 probability that there
is no relationship between the same of the store and the store area.
Answer 4:
Let H0 :: 1 = 500 ; then H1 :: 2 500
Then, t51 = (311-500)/31.53 = -6 and associated p-value for the two tailed t-distribution <
0.001 < = 0.05
Thus we can reject H0 and say that the retail industry wisdom of 500 per sq ft in sales is not
correct.