Business Quantitative Techniques

Submit By:
Uzair Zia Nagi (07108025)
Rana Shoaib Rashid Khan (07108095)
Submit To:
Sir Abid Awan
Date:
23.9.2010

Table of Contents Page No

Executive Summary………………………………..……….3

Acknowledgement……………………………….…….……4

Mean and Mean Deviation about Mean………………….5

Mode………………………………………………….……..15

Variance and Standard Deviation...........................…...16

Coefficient of Variation……………………………………25

Estimation of Mean………………………………………..28

Estimation of Variance……………………………………35

Anova……………………………………………………….43

Multiple Regression……………………………………….47
 EXECUTIVE SUMMARY

Outfitters and Crossroad is a renowned brand in Pakistan. They have been in market from several
years back. They are providing a number of quality ensured products. Their outlets are located in
almost 30 to 35 cities of Pakistan. They both are main competitors.

The variables we selected for this purpose are Sales, Expenses and Profit. The requirement of our
project is to apply all the tools of BQT i.e. descriptive statistics, Hypotheses and multiple
regressions.

We did our calculations manually and as well as on Microsoft Excel and further interpreted each
tool applied on selected variables
 ACKNOWLEDGEMENT

This project is the part of our Business Quantitative Technique Course. We have selected the
Outfitters and Crossroads Outlet from Gujranwala.

We personally visited the outlet for data and we were directed by our respectable Teacher Mr.
Abid Awan who has morally supported and encouraged us a lot in every step.

Allah Almighty has enabled us to present this Report therefore; we trust this report will satisfy
all the concerned parties especially our teacher
Proposal
Group Members

Uzair Zia Nagi (07108025)

Rana Shoaib Rashid Khan (07108095)

Company Names

 Outfitters
This company was established in 2001. This company has 32 outlets in all over the
Pakistan. Outfitters deal in wearing stuff including shoes, clothing as well as carrying
stuff like bags, and causal bands for boys and girls.
 Crossroads
This company was established in1999. This company has 36 outlets in all over the
Pakistan. Crossroad deals in all kind of stuff like clothes, shoes, bags, causal bands, caps
etc.

Variables:

Independent variable

 Sales (X1)
 General Expense (X2)

Dependent variable

 Profit (Y)
Introduction:
We have selected two company Crossroads and Outfitters. We have to apply business
quantitative technique tools on the 24 months or 2 years previous data. So we have multiple tools
to apply such as

 Mean
 Variance
 Standard deviation
 Co-efficient of variation
 Chebyshev’s theorem
 Skewness
 Hypotheses
 Multi-Regression

Mean:

This article is about the statistical concept. For other uses, see Mean (disambiguation).

In  statistics, mean has two related meanings: the arithmetic mean (and is distinguished from

the geometric mean or harmonic mean).the expected value of a random variable, which is also
called the  population mean.

There are other statistical measures that use samples that some people confuse with averages -
including 'median' and 'mode'. Other simple statistical analyses use measures of spread, such as
range,  inter-quartile range, or standard deviation. For a real-valued random variable X, the
mean is the expectation of X. Note that not every probability distribution  has a defined mean
(or variance); see the Cauchy distribution for an example.

For a data set, the mean is the sum of the values divided by the number of values. The mean of a
set of numbers x1, x2... xn is typically denoted by  , pronounced "x bar". This mean is a type of
arithmetic mean. If the data set was based on a series of observations obtained
by sampling  a statistical population, this mean is termed the "sample mean" to distinguish it
from the "population mean". The mean is often quoted along with the standard deviation: the
mean describes the central location of the data, and the standard deviation describes the spread.
An alternative measure of dispersion is the mean deviation, equivalent to the average absolute
deviation from the mean. It is less sensitive to outliers, but less mathematically tractable.
If a series of observations is sampled from a larger population (measuring the heights of a
sample of adults drawn from the entire world population, for example), or from a probability
distribution  which gives the probabilities of each possible result, then the larger population or
probability distribution can be used to construct a "population mean", which is also
the expected value  for a sample drawn from this population or probability distribution. For a
finite population, this would simply be the arithmetic mean of the given property for every
member of the population. For a probability distribution, this would be a sum or integral over
every possible value weighted by the probability of that value. It is a universal convention to
represent the population mean by the symbol μ In the case of a discrete probability distribution,
the mean of a discrete random variable x is given by taking the product of each possible value of
x and its probability P(x), and then adding all these products together, giving

The sample mean may be different than the population mean, especially for small samples, but
the law of large numbers dictates that the larger the size of the sample, the more likely it is that
the sample mean will be close to the population mean

As well as statistics, means are often used in geometry and analysis; a wide range of means have
been developed for these purposes, which are not much used in statistic

Variance:
In probability theory and statistics, the variance is used as one of several descriptors of
a distribution. It describes how far values lie from the mean. In particular, the variance is one of
the moments of a distribution. In that context, it forms part of a systematic approach to
distinguishing between probability distributions. While other such approaches have been
developed, those based on moments are advantageous in terms of mathematical and
computational simplicity.

Standard deviation:

In probability theory and statistics, the standard deviation of a statistical population, a data set, or

a probability distribution is the square root of its variance. Standard deviation is a widely used
measure of the variability or dispersion, being algebraically more tractable though practically
less robust than the expected deviation or average absolute deviation.
It shows how much variation there is from the "average" (mean or expected/budgeted value). A
low standard deviation indicates that the data points tend to be very close to the mean, whereas
high standard deviation indicates that the data is spread out over a large range of values.
The term standard deviation was first used in writing by Karl Pearson in 1894, following his use
of it in lectures. This was as a replacement for earlier alternative names for the same idea: for
example, Gauss used mean error. A useful property of standard deviation is that, unlike variance,
it is expressed in the same units as the data. Note, however, that for measurements
with percentage as unit, the standard deviation will have percentage points as unit.

Coefficient of variation (CV):

In probability theory and statistics, the coefficient of variation (CV) is a normalized measure

of dispersion of a probability distribution. It is defined as the ratio of the standard deviation   to
the mean :

This is only defined for non-zero mean, and is most useful for variables that are always positive.
It is also known as unitized risk or the variation coefficient. It is expressed as percentage.

The coefficient of variation should only be computed for data measured on a ratio scale. As an
example, if a group of temperatures are analyzed, the standard deviation does not depend on
whether the Kelvin or Celsius scale is used since an object that changes its temperature by 1 K
also changes its temperature by 1 C. However the mean temperature of the data set would differ
in each scale by an amount of 273 and thus the coefficient of variation would differ. So the
coefficient of variation does not have any meaning for data on an interval scale.[1]

Skewness:
In probability theory and statistics, skewness is a measure of the asymmetry of the probability
distribution of a real-valued random variable. The skewness value can be positive or negative, or
even undefined. Qualitatively, a negative skew indicates that the tail on the left side of the
probability density function is longer than the right side and the bulk of the values (including the
median) lie to the right of the mean. A positive skew indicates that the tail on the right side
is longer than the left side and the bulk of the values lie to the left of the mean. A zero value
indicates that the values are relatively evenly distributed on both sides of the mean, typically but
not necessarily implying a symmetric distribution.
Hypothesis:

When a possible correlation or similar relation between phenomena is investigated, such as, for
example, whether a proposed remedy is effective in treating a disease, that is, at least to some
extent and for some patients, the hypothesis that a relation exists cannot be examined the same
way one might examine a proposed new law of nature: in such an investigation a few cases in
which the tested remedy shows no effect do not falsify the hypothesis. Instead, statistical
tests are used to determine how likely it is that the overall effect would be observed if no real
relation as hypothesized exists. If that likelihood is sufficiently small (e.g., less than 1%), the
existence of a relation may be assumed. Otherwise, any observed effect may as well be due to
pure chance.

In statistical hypothesis testing two hypotheses are compared, which are called the null
hypothesis and the alternative hypothesis. The null hypothesis is the hypothesis that states that
there is no relation between the phenomena whose relation is under investigation, or at least not
of the form given by the alternative hypothesis. The alternative hypothesis, as the name suggests,
is the alternative to the null hypothesis: it states that there is some kind of relation. The
alternative hypothesis may take several forms, depending on the nature of the hypothesized
relation; in particular, it can be two-sided (for example: there is some effect, in a yet unknown
direction) or one-sided (the direction of the hypothesized relation, positive or negative, is fixed in
advance).

Proper use of statistical testing requires that these hypotheses, and the threshold (such as 1%) at
which the null hypothesis is rejected and the alternative hypothesis is accepted, all be determined
in advance, before the observations are collected or inspected. If these criteria are determined
later, when the data to be tested is already known, the test is invalid.

Multi-Regression:

In statistics, linear regression is any approach to modeling the relationship between a scalar

variable y and one or more variables denoted X. In linear regression, models of the
unknown parameters are estimated from the data using linear functions. Such models are called
“linear models.” Most commonly, linear regression refers to a model in which the conditional
mean of y given the value of X is an affine function of X. Less commonly, linear regression
could refer to a model in which themedian, or some other quantile of the conditional distribution
of y given X is expressed as a linear function of X. Like all forms of regression analysis, linear
regression focuses on the conditional probability distribution of y given X, rather than on
the joint probability distribution of y and X, which is the domain of multivariate analysis.

Linear regression was the first type of regression analysis to be studied rigorously, and to be used
extensively in practical applications. This is because models which depend linearly on their
unknown parameters are easier to fit than models which are non-linearly related to their
parameters and because the statistical properties of the resulting estimators are easier to
determine.

Linear regression has many practical uses. Most applications of linear regression fall into one of
the following two broad categories:

 If the goal is prediction, or forecasting, linear regression can be used to fit a predictive
model to an observed data set of yand X values. After developing such a model, if an
additional value of X is then given without its accompanying value of y, the fitted model can
be used to make a prediction of the value of y.
 Given a variable y and a number of variables X1, ..., Xp that may be related to y, then
linear regression analysis can be applied to quantify the strength of the relationship
between y and the Xj, to assess which Xj may have no relationship with y at all, and to
identify which subsets of the Xj contain redundant information about y, thus once one of
them is known, the others are no longer informative.
Linear regression models are often fitted using the least squares approach, but they may also be
fitted in other ways, such as by minimizing the “lack of fit” in some other norm, or by
minimizing a penalized version of the least squares loss function as in ridge regression.
Conversely, the least squares approach can be used to fit models that are not linear models. Thus,
while the terms “least squares” and linear model are closely linked, they are not synonymous.
Raw Data and Analysis:

Crossro
ads
2008 sale profi G.Expe
t nce
Jan 249 62.25 16.16
Feb. 275 68.75 17.24
mar 285 71.25 18.85
April 259 64.75 18.45
may 266 66.5 17.97
June 294 73.5 18.95
July 239 59.75 22.45
August 298 74.5 23.76
Sep 310 77.5 21.46
October 276 69 18.94
November 264 66 16.84
December 257 64.25 15.94
2009
Jan 251 62.75 15.84
Feb. 286 71.5 17.66
mar 330 82.5 18.88
April 294 73.5 19.01
may 269 67.25 18.74
June 255 63.75 21.94
July 260 65 24.12
August 291 72.75 22.76
Sep 299 74.75 20.33
October 265 66.25 19.88
November 242 60.5 18.11
December 238 59.5 17.26
Crossroads

Sale
8
7
6
5
Total
4
3
2
1
0
(blank) 238-252 253-267 268-282 283-297 298-312 328-342

Count of
Row Labels 249
(blank)
238-252 4
253-267 7
268-282 3
283-297 5
298-312 3
328-342 1
Grand
Total 23

Interpretation:
In this graph we can see the interval 253-267 which has the maximum values. This interval has average
sale. The period of august and February is the sale period so the sale is high at that time.
 G.Expence
10
9
8
7
6 Total
5
4
3
2
1
0

Count of
Row Labels G.Expence
(blank)
15.84-17.84 7
17.84-19.84 9
19.84-21.84 3
21.84-23.84 4
23.84-25.84 1
Grand
Total 24

Interpretation:
In this graph we can the general expense of the crossroads. Here you can see the amounts crossing low
value tells that this was summer season and because of high consumption of electricity.
 Profit
9
8
7
6
5 Total

4
3
2
1
0
(blank) 59.5-64.5 64.5-69.5 69.5-74.5 74.5-79.5 79.5-84.5

Count of
Row Labels profit
(blank)
59.5-64.5 7
64.5-69.5 8
69.5-74.5 5
74.5-79.5 3
79.5-84.5 1
Grand
Total 24

Interpretation:
In this graph we can the profit of the crossroads. Here you can see the amounts crossing 69 tells that this
was discount season and because of high sales.
Outfitters
G.Expenc
2008 Sale profit e
jan 285 57 21.5
feb 325 65 22.3
mar 337 67.4 20.88
april 298 59.6 20.54
may 279 55.8 19.65
june 290 58 23.23
july 285 57 24.56
aug 333 66.6 27.89
sep 347 69.4 21.74
oct 291 58.2 19.89
nov 286 57.2 17.66
dec 281 56.2 18.52
2009
jan 278 55.6 22.62
feb 320 64 23.45
mar 301 60.2 19.21
april 292 58.4 21.24
may 275 55 18.26
june 286 57.2 24.56
july 281 56.2 25.59
aug 335 67 26.42
sep 340 68 22.36
oct 294 58.8 18.82
nov 280 56 19
dec 278 55.6 17.48
Outfitters
Sale

sale
9
8
7
6
5 Total

4
3
2
1
0
(blank) 275-284 285-294 295-304 315-324 325-334 335-344 345-354

Count of
Row Labels sale
(blank)
275-284 7
285-294 8
295-304 2
315-324 1
325-334 2
335-344 3
345-354 1
Grand
Total 24

Interpretation:

In this graph we can see the interval 285-294 which has the maximum values. This interval has average
sale. The period of august and February is the sale period so the sale is high at that time.
Profit:

profit
12

10

8
Total
6

0
(blank) 55-58 58-61 64-67 67-70

Count of
Row Labels profit
(blank)
55-58 11
58-61 6
64-67 3
67-70 4
Grand
Total 24
Interpretation

In this graph we can the profit of the crossroads. Here you can see the amounts crossing 69 tells that this
was discount season and because of high sales
General Expence

G.Expence
8
7
6
5
4
Total
3
2
1
0

Count of
Row Labels G.Expence
(blank)
17.48-19.48 7
19.48-21.48 5
21.48-23.48 7
23.48-25.48 2
25.48-27.48 2
27.48-29.48 1
Grand
Total 24

Interpretation:

In this graph we can the general expense of the crossroads. Here you can see the amounts crossing low
value tells that this was summer season and because of high consumption of electricity.
Dispersion Tools for Crossroad and Outfitters
Mean
Crossroads Outfitters

Sales

X X
X X
n n

6552 7197
X X
24 24

X  273 X  299.875

Interpretation:

According to mean value we can say the average sale of crossroad in 24 months was Rs 273000
and the average sale of outfitters in 24 months was Rs 299875.

Profit

X X
X X
n n

1638 1439.4
X X
24 24

X  68.25 X  59.975

Interpretation:

According to mean value we can say that the average profit of crossroad in 24 months was Rs 68250
and the average profit of outfitters in 24 months was Rs 59975.
General expense

X X
X X
n n

461.54 517.37
X X
24 24
X  19.23083 X  21.55708

Interpretation:

According to mean value we can say the average general expense of crossroad in 24 months was
Rs 19230 and the average general expense of outfitters in 24 months was Rs 21557.

Standard Deviation
Crossroads Outfitters
Sales

x x x x
2 2 2 2

S    S   
n  n  n  n 

2 2
1801704  6552  2171001  7197 
S   S  
24  24  24  24 

S  27.13 S  22.84

Interpretation:

According to the standard deviation outfitter’s sale have less dispersion then the sales of
crossroad because dispersion of outfitter is low from mean point.

Profit

x x x x
2 2 2 2

S    S   
n  n  n  n 
`

2 2
112606.5  1638  86840.04  1439.4 
S   S  
24  24  24  24 
S  6.78 S  4.56

Interpretation:

According to the standard deviation outfitter’s profit have less dispersion then the profit of
crossroad because dispersion of outfitter is low from mean point.

General expense

x x x x
2 2 2 2

S    S   
n  n  n  n 

2 2
9008.938  461.54  11339.2395  517.37 
S   S  
24  24  24  24 

S  2.41 S  3.03

Interpretation:

According to the standard deviation outfitter’s general expense have more dispersion then the
general expense of crossroad because dispersion of Crossroad is low from mean point.

Co-efficient of variation
Crossroad Outfitters
Sale
S .D S .D
C.V  C.V 
X X

27.13 22.84
C.V  C.V 
273 299.875

C.V  0.099 C.V  0.076

Interpretation

According to co-efficient variation value Outfitters sales is more consistent then crossroads sale.
So Outfitters is better brand then crossroads.
Profit
S .D S .D
C.V  C.V 
X X

6.78 4.56
C.V  C.V 
68.258 59.975

C.V  .099 C.V  0.076

Interpretation

According to co-efficient variation value Outfitters profit is more consistent then crossroads
profit. So Outfitters is better brand then crossroads

General Expense
S .D S .D
C.V  C.V 
X X

2.41 3.03
C.V  C.V 
19.23 21.55

C.V  0.125 C.V  0.14

Interpretation

According to co-efficient variation value Outfitters general expense is less consistent then
crossroads profit. So in this case we say crossroads is better then outfitters.

Skewness
Crossroad Outfitter

Sales
3( X  Medain) 3( X  Medain)
Sk  Sk 
S .D S .D

3(273  267) 3(299.87  289)

Sk  Sk 
27.1371 22.8486
Sk  0.655 Sk  1.07

Interpretation:

According to the value of crossroad skewness show that it is greater than 0 and the value of
Outfitters also show that it is greater than 0 so they both are right skewed and because of this we
can`t use empirical rule so we use Chebyshev’s theorem for them.

Profit
3( X  Medain) 3( X  Medain)
Sk  Sk 
S .D S .D

3(68.25  66.7) 3(59.975  57.8)

Sk  Sk 
6.78 4.56

Sk  0.655 Sk  1.07

Interpretation:

According to the value of crossroad skewness show that it is greater than 0 and the value of
Outfitters also show that it is greater than 0 so they both are right skewed and because of this we
can`t use empirical rule so we use Chebyshev’s theorem for them.

General Expense
3( X  Medain) 3( X  Medain)
Sk  Sk 
S .D S .D

3(19.23  18.9) 3(21.55  21.8)

Sk  Sk 
2.41 3.03

Sk  0.548 Sk  0.21

Interpretation:

According to the value of crossroad skewness show that it is greater than 0 and the value of
Outfitters also show that it is greater than 0 so they both are right skewed and because of this we
can`t use empirical rule so we use Chebyshev’s theorem for them.
Chebyshev’s theorem
Crossroads Outfitters

Sales
h.v  X h.v  X
k k
S .D S .D

330  273 347  299.87

k k
27.13714 22.84

k  2.1 k  2.06

1 1
 1  1
k2 k2

1 1
Chebyshev’s theorem  1  Chebyshev’s theorem  1 
(2.1) 2 (2.06) 2

Chebyshev’s theorem  .77 100 Chebyshev’s theorem  .76 100

 77%  76%

Interpretation:

When we add and subtract two time of standard deviation in the mean then 77% of data cover in
crossroad sale and 76% of data cover in outfitter sale.

Profit
h.v  X h.v  X
k k
S .D S .D

82.5  68.25 69.4  59.97

k k
6.78 4.56

k  2.1 k  2.06

1 1
 1  1
k2 k2
 1 1
Chebyshev’s theorem  1  Chebyshev’s theorem  1 
(2.1)2 (2.06) 2

Chebyshev’s theorem  .77 100 Chebyshev’s theorem  .76 100

 77%  76%

Interpretation:

When we add and subtract two time of standard deviation in the mean then 77% of data cover in
crossroad profit and 76% of data cover in outfitter profit.

General expense
h.v  X h.v  X
k k
S .D S .D

24.12  19.23 27.89  21.55

k k
2.41 3.03

k  2.02 k  2.09

1 1
 1  1
k2 k2

1
Chebyshev’s theorem  1 
(2.02) 2 1
Chebyshev’s theorem  1 
(2.09) 2
Chebyshev’s theorem  .75  100
Chebyshev’s theorem  .77 100

 75%  77%

Interpretation:

When we add and subtract two time of standard deviation in the mean then 75% of data cover in
crossroad general expense and 77% of data cover in outfitter general expense.
Hypotheses Testing
Q 1: An asad research company wants to check that which company has more sales in
Gujranwala city while Outfitter outlet is in the market and crossroad outlet is out of market.
According to sample of 24 month sales of outfitters which shows the mean sale is 299.87
thousand with the standard deviation of 22.848 thousand and the sale of Crossroads which shows
the mean sale is 273 thousand with the standard deviation of27.137 thousand. Can you conclude
that outfitters mean sale is same as Crossroad mean sale? Assume that the outfitters and
crossroads sale are normally distributed.

A. Construct a 90% confidence level of the sales of outfitters and Crossroads

B. Test at the 5% significance level.

Solution:

Outfitters Crossroads

X 1  299.87 X 2  273
S1  22.848 S 2  27.137
n1  24 n2  24

1  .90

 0.1

A. Confidence Interval

X 1  X 2  tS X1  X 2

t 
v,
2

2
 S 21 S 2 2 
  
 n1 n2 
v  df  2 2
 S 21   S 2 2 
   
 n1    n2 
 n1  1  n2  1
 2
 521.66 736.03 
  
 24 24 
v  df  2 2
 521.66   736.03 
   
 24    24 
 24  1  24  1
v  df  44.70

t44,0.05
t  1.680

S 21 S 2 2
S X1  X 2  
n1 n2

521.66 736.03
S X1  X 2  
24 24

S X1  X 2  7.23

X 1  X 2  tS X1  X 2

26.87  1.680(31.61)

26.87  53.10488

 26.87    79.97 
Interpretation:
B. Testing Hypothesis

1  2
H 0 : 1  2  0
H1 : 1  2  0  0.05

T -distribution

t 
v,
2

t 44,0.025

t  2.015

-2.015 2.015

If t < -2.015 and t > 2.015 then we reject ho otherwise we do not reject ho

t
X 1  X 2    1   2 
S X1  X 2

t
 299.87  273   0 
31.61

t  0.85

So t is 0.85 > -2.015 and 0.85 < 2.0215 so we don`t reject Ho.

Interpretation:
Q2: An asad research company wants to check that which company has more sales in
Gujranwala city while Outfitter outlet is in the market and crossroad outlet is out of market.
According to sample of 24 month expense of outfitters which shows the mean expense is 21.557
thousand with the standard deviation of 3.03 thousand and the expense of Crossroads which
shows the mean expense is 19.230 thousand with the standard deviation of2.41 thousand. Can
you conclude that outfitters mean expense is same as Crossroad mean expense? Assume that the
outfitters and crossroads sale are normally distributed.

A. Construct a 95% confidence level of the sales of outfitters and Crossroads

B. Test at the 2% significance level.

Outfitters Crossroads

X 1  21.557 X 2  19.230
S1  3.03 S2  2.41
n1  24 n2  24

1  .95

 0.05

A. Confidence Interval

X 1  X 2  tS X1  X 2

t 
v,
2

2
 S 21 S 2 2 
  
v  df   n1 n2 
2 2
 S 21   S 2 2 
   
 n1    n2 
 n1  1  n2  1
2
 9.180 5.808 
  
 24 24 
v  df  2 2
 9.180   5.808 
   
 24    24 
 24  1  24  1
v  df  45.06

t45,0.025
t  2.014

S 21 S 2 2
S X1  X 2  
n1 n2

9.180 5.808
S X1  X 2  
24 24

S X1  X 2  0.787

X 1  X 2  tS X1  X 2

2.32  2.014(0.787)

2.32  3.90

 0.735    3.90 
Interpretation:

B. Testing Hypothesis

1  2
H 0 : 1  2  0
H1 : 1  2  0  0.02

T -distribution
t 
v,
2

t45,0.025
t  2.412

-2.412 2.412

If t < -2.015 and t > 2.015 then we reject ho otherwise we do not reject ho

t
X 1  X 2    1  2 
S X1  X 2

t
 21.55  19.23   0 
31.61

t  2.94

So t is 2.94 > -2.412 and 2.94 < 2.412 so we reject Ho.

Interpretation:

Because outfitters are single brand on outlet but crossroad is not single brand. The outlet have
multi brand so that’s why its expanses were divided and its expenses is less.

Q3: An asad research company wants to check that which company has more sales in
Gujranwala city while Outfitter outlet is in the market and crossroad outlet is out of market.
According to sample of 24 month profit of outfitters which shows the mean profit is 59.975
thousand with the standard deviation of 4.56 thousand and the profit of Crossroads which shows
the mean profit is 68.25 thousand with the standard deviation of 6.78 thousand. Can you
conclude that outfitters mean profit is same as Crossroad mean profit? Assume that the outfitters
and crossroads profit are normally distributed.

A. Construct a 90% confidence level of the sales of outfitters and Crossroads

B. Test at the 2.5% significance level.

Outfitters Crossroads

X 2  59.975 X 1  68.25
S 2  4.56 S1  6.78
n2  24 n1  24

1  .90

 0.1

A. Confidence Interval

X 1  X 2  tS X1  X 2

t 
v,
2

2
 S 21 S 2 2 
  
 n1 n2 
v  df  2 2
 S 21   S 2 2 
   
 n1    n2 
 n1  1  n2  1
2
 20.79 45.96 
  
 24 24 
v  df  2 2
 20.79   45.96 
   
 24    24 
 24  1  24  1
v  df  40
t40,0.05
t  1.684

S 21 S 2 2
S X1  X 2  
n1 n2

20.79 45.96
S X1  X 2  
24 24

S X1  X 2  1.667

X 1  X 2  tS X1  X 2

8.275  1.684(1.667)

8.275  2.80

 5.475    11.077 
Interpretation:

B. Testing Hypothesis

1  2
H 0 : 1  2  0
H1 : 1  2  0  0.025

T -distribution
tv ,
t42,0.025
t  2.018

2.412

If t > 2.015 then we reject ho otherwise we do not reject ho

t
X 1  X 2    1  2 
S X1  X 2

t
 68.25  59.975   0 
1.666

t  4.966

So t is 4.966 < 2.018 so we reject Ho.

Interpretation:
Multiple Regressions:

CrossRoads

y x1 x2 x1y x2y x1^2 x2^2 x1x2

15500.2 261.145
62.25 249 16.16 5 1005.96 62001 6 4023.84
18906.2 297.217
68.75 275 17.24 5 1185.25 75625 6 4741
20306.2 1343.06 355.322
71.25 285 18.85 5 3 81225 5 5372.25
16770.2 1194.63 340.402
64.75 259 18.45 5 8 67081 5 4778.55
1195.00 322.920
66.5 266 17.97 17689 5 70756 9 4780.02
1392.82 359.102
73.5 294 18.95 21609 5 86436 5 5571.3
14280.2 1341.38 504.002
59.75 239 22.45 5 8 57121 5 5365.55
564.537
74.5 298 23.76 22201 1770.12 88804 6 7080.48
460.531
77.5 310 21.46 24025 1663.15 96100 6 6652.6
358.723
69 276 18.94 19044 1306.86 76176 6 5227.44
283.585
66 264 16.84 17424 1111.44 69696 6 4445.76
16512.2 1024.14 254.083
64.25 257 15.94 5 5 66049 6 4096.58

15750.2 250.905
62.75 251 15.84 5 993.96 63001 6 3975.84
311.875
71.5 286 17.66 20449 1262.69 81796 6 5050.76
356.454
82.5 330 18.88 27225 1557.6 108900 4 6230.4
1397.23 361.380
73.5 294 19.01 21609 5 86436 1 5588.94
18090.2 1260.26 351.187
67.25 269 18.74 5 5 72361 6 5041.06
16256.2 1398.67 481.363
63.75 255 21.94 5 5 65025 6 5594.7
 581.774
65 260 24.12 16900 1567.8 67600 4 6271.2
21170.2 518.017
72.75 291 22.76 5 1655.79 84681 6 6623.16
22350.2 1519.66 413.308
74.75 299 20.33 5 8 89401 9 6078.67
17556.2 395.214
66.25 265 19.88 5 1317.05 70225 4 5268.2
1095.65 327.972
60.5 242 18.11 14641 5 58564 1 4382.62
297.907
59.5 238 17.26 14161 1026.97 56644 6 4107.88
180170 9008.93 126348.
1638 6552 461.54 450426 31587.2 4 8 8

Crossroads

SUMMARY OUTPUT

Regression Statistics
Multiple R 1
R Square 1
Adjusted R
Square 1
Standard
Error 0
Observatio
ns 24

ANOVA
Significan
  df SS MS F ce F
#NUM
Regression 2 813 406.5 ! #NUM!
Residual 21 0 0
Total 23 813      
 Uppe
Coefficien Standar P- Lower r Lower Upper
  ts d Error t Stat value 95% 95% 95.0% 95.0%
6553 #NUM
Intercept 0 0 5 ! 0 0 0 0
X Variable 6553 #NUM
1 0.25 0 5 ! 0.25 0.25 0.25 0.25
X Variable 6553 #NUM
2 0 0 5 ! 0 0 0 0

Outfitters

y x1 x2 x1y x2y x1^2 x2^2 x1x2

57 285 21.5 16245 1225.5 81225 462.25 6127.5
65 325 22.3 21125 1449.5 105625 497.29 7247.5
1407.31 435.974
67.4 337 20.88 22713.8 2 113569 4 7036.56
1224.18 421.891
59.6 298 20.54 17760.8 4 88804 6 6120.92
386.122
55.8 279 19.65 15568.2 1096.47 77841 5 5482.35
539.632
58 290 23.23 16820 1347.34 84100 9 6736.7
603.193
57 285 24.56 16245 1399.92 81225 6 6999.6
1857.47 777.852
66.6 333 27.89 22177.8 4 110889 1 9287.37
1508.75 472.627
69.4 347 21.74 24081.8 6 120409 6 7543.78
1157.59 395.612
58.2 291 19.89 16936.2 8 84681 1 5787.99
57.2 286 17.66 16359.2 1010.15 81796 311.875 5050.76
 2 6
1040.82 342.990
56.2 281 18.52 15792.2 4 78961 4 5204.12
0 0 0 0 0
1257.67 511.664
55.6 278 22.62 15456.8 2 77284 4 6288.36
549.902
64 320 23.45 20480 1500.8 102400 5 7504
1156.44 369.024
60.2 301 19.21 18120.2 2 90601 1 5782.21
1240.41 451.137
58.4 292 21.24 17052.8 6 85264 6 6202.08
333.427
55 275 18.26 15125 1004.3 75625 6 5021.5
1404.83 603.193
57.2 286 24.56 16359.2 2 81796 6 7024.16
1438.15 654.848
56.2 281 25.59 15792.2 8 78961 1 7190.79
698.016
67 335 26.42 22445 1770.14 112225 4 8850.7
499.969
68 340 22.36 23120 1520.48 115600 6 7602.4
1106.61 354.192
58.8 294 18.82 17287.2 6 86436 4 5533.08
56 280 19 15680 1064 78400 361 5320
305.550
55.6 278 17.48 15456.8 971.888 77284 4 4859.44
434200. 31160.7 217100 11339.2 155803.
1439.4 7197 517.37 2 7 1 4 9

SUMMARY OUTPUT
 Regression Statistics
Multiple R 1
R Square 1
Adjusted
R Square 1
Standard
Error 2.52E-15
Observatio
ns 24

ANOVA
Significan
  df SS MS F ce F
512.02 4.04E+
Regression 2 5 256.0125 31 0
1.33E- 6.34139E-
Residual 21 28 30
512.02
Total 23 5      

Lowe Uppe
Standa Upp r r
Coefficie rd Lower er 95.0 95.0
  nts Error t Stat P-value 95% 95% % %
Intercept 0.00 0.00 -3.15 0.00 0.00 0.00 0.00 0.00
X Variable #########
1 0.20 0.00 ## 0.00 0.20 0.20 0.20 0.20
X Variable
2 0.00 0.00 0.03 0.98 0.00 0.00 0.00 0.00

Mathematical regression
^
y  a  b1 x1  b2 x2
 y  na  b1  x1  b2  x2
 x1 y  a  x1  b1  x12  b2  x1 x2
 x2 y  a  x2  b1  x1 x2  b2  x2 2

Crossroads outfitter

1638  24a  b1 6552  b2 461.54 1439.4  24a  b1 7197  b2 517.37

450426  a 6552  b11801704  b2126349 434200  a7197  b1 2171001  b2155804
31587.2  a 461.54  b1126349  b2 9008094 31160.8  a5171.37  b1155804  b211339.2

a0 a0
b1  .25 b1  .20
b2  0 b2  0

^ ^
y  0  .25 x1  0 x2 y  0  .20 x1  0 x2

According to Regression Equation

^ ^
y  0  .25 x1  0 x2 y  0  .20 x1  0 x2

According to the regression equation we find that, the relation between our three variables. If our sale of
crossroad is 1000 than our profit is 250 and because of zero relation of our expense with profit so too
does not affect the amount of profit and value of a that we calculate is also zero but we assume that our a
value is -.10 with means it is -1000rs so its show that if we have no sales and no expense the we have
1000rs expense. In case of outfitter if our sale is 1000 than our profit are 200. The value of

Crossroad

y-
y^ y^ e2 y-y (y-y)2 R2 r
62.5 0 0 -6 36
68.5 0 0 0.5 0.25 1 1
71.5 0 0 3 9
64.7
5 0 0 -3.5 12.25
-
66.5 0 0 1.75 3.0625
27.562
73.5 0 0 5.25 5
59.7
5 0 0 -8.5 72.25
39.062
74.5 0 0 6.25 5
85.562
77.5 0 0 9.25 5
69 0 0 0.75 0.5625
-
66 0 0 2.25 5.0625
64.2
5 0 0 -4 16

62.7
5 0 0 -5.5 30.25
10.562
71.5 0 0 3.25 5
14.2 203.06
82.5 0 0 5 25
27.562
73.5 0 0 5.25 5
67.2
5 0 0 -1 1
63.7
5 0 0 -4.5 20.25
- 10.562
65 0 0 3.25 5
72.7
5 0 0 4.5 20.25
74.7
5 0 0 6.5 42.25
66.2
5 0 0 -2 4
- 60.062
60.5 0 0 7.75 5
- 76.562
59.5 0 0 8.75 5
0 0 0 813 813
sse sst ssr
Outfitters
y^ y-y^ e2 y-y (y-y)2 r2 r
57 0 0 -2.975 8.850625
65 0 0 5.025 25.25063 1 1
67.4 0 0 7.425 55.13063
59.6 0 0 -0.375 0.140625
55.8 0 0 -4.175 17.43063
58 0 0 -1.975 3.900625
57 0 0 -2.975 8.850625
66.6 0 0 6.625 43.89063
69.4 0 0 9.425 88.83063
58.2 0 0 -1.775 3.150625
57.2 0 0 -2.775 7.700625
56.2 0 0 -3.775 14.25063
55.6 0 -4.375 19.14063
64 0 0 4.025 16.20063
60.2 0 0 0.225 0.050625
58.4 0 0 -1.575 2.480625
55 0 0 -4.975 24.75063
57.2 0 0 -2.775 7.700625
56.2 0 0 -3.775 14.25063
67 0 0 7.025 49.35063
68 0 0 8.025 64.40063
58.8 0 0 -1.175 1.380625
56 0 0 -3.975 15.80063
55.6 0 0 -4.375 19.14063

0 512.025 512.025
sse sst ssr
Crossroads Outfitters

SST=813 SST=512.025

SSR=813 SSR=512.025

SSE=0 SSE=0

SSR SSR
r2  r2 
SST SST
813 512.025
r2  r2 
813 512.025

r2  1 r2  1

r2 is explain the variation in the actual and predicted values (profit), it shows the variation or error due to
contingency and environmental factors like affect of other independent variable and personal fault or
human error. In our case our equations does not contain any error.

r2  1 r2  1

r 1 r 1

The correlation shows the relationship between selected variables, r = 1 shows that there is perfect
positive relationship between General Expense, Sales and Profit. If the companies increases their sales by
this affect, the company’s profit also increases by same ratio due the direct and perfect relationship
between sales and profit.

Hypothesis testing of regression equation

Crossroads
It is the crossroads sale slope hypotheses when b1 which slope of sale or per unit change of sale
of crossroads

H0 : B  0
H1 : B  0, B  0, B  0

T -distribution

t v ,
t23,0.05
t  1.714

1.714

If t > 1.714 then we reject ho otherwise we do not reject ho

 Se
Sb 
2
bB x
t  x2   
Sb  n 

1.92
Sb 
2
.25  0  6552 
t 1801704   
0.0014  24 

t  178.57
Sb  0.0014

SSE
Se 
Value of t is 178.57 > 1.714 n2

81.3
Se 
So we reject H₀ 24  2
Se  1.92

Conclusion
Null hypothesis is that slope of X1 is equal to zero, and but after testing we get that the slope of X1 is not
equal to zero and we reject H0

It is the crossroads General expense slope hypotheses when b2 which slope of sale or per
unit change of sale of crossroads

H0 : B  0
H1 : B  0, B  0, B  0

T -distribution

t v ,
t23,0.05
t  1.714
 1.714

If t > 1.714 then we reject ho otherwise we do not reject ho

Se
Sb 
2
bB x
t  x2   
Sb  n 

1.92
Sb 
2
00  461.54 
t 9008.938   
0.020  24 

t 0
Sb  0.020

SSE
Se 
Value of t is 0 < 1.714 n2

So we do not reject H₀
81.3
Se 
24  2 Se  1.92

Conclusion
Null hypothesis is that slope of X1 is less than zero, and but after testing we get that the slope of X1 is
less than zero and we donot reject H0

It is the crossroads Regression hypotheses.

H0 :   0
H1 :   0,   0,   0

T -distribution
 t v ,
t23,0.05
t  1.714

1.714

If t > 1.714 then we reject ho otherwise we do not reject ho

n2
tr
1 r2

24  2
t 1
11

t  4.69

T is 4.69 > 1.714

So we reject H₀

Conclusion
Null hypothesis is
H 0 :   0 , and but after testing we get that H1 :   0,   0,   0 and we reject H
0
 Outfitters
It is the outfitters sales slope hypotheses when b2 which slope of sale or per unit change of sale
of crossroads

H0 : B  0
H1 : B  0, B  0, B  0

T -distribution

t v ,
t23,0.05
t  1.714
 1.714

If t > 1.714 then we reject ho otherwise we do not reject ho

Se
Sb 
2
bB x
t  x2   
Sb  n 

1.52
Sb 
2
0.2  0  7197 
t 2171001   
0.0010  24 

t  189.81
Sb  0.0010

SSE
Se 
Value of t is 189.81 > 1.714 n2

So we reject H₀
51.2
Se 
24  2 Se  1.52

Conclusion
Null hypothesis is that slope of X1 is less than zero, and but after testing we get that the slope of X1 is
greater than zero and we reject H0

It is the crossroads General expense slope hypotheses when b2 which slope of sale or per
unit change of sale of crossroads

H0 : B  0
H1 : B  0, B  0, B  0

T -distribution

t v ,
t23,0.05
t  1.714

1.714

If t > 1.714 then we reject ho otherwise we do not reject ho

Se
Sb 
2
bB x
t  x 
2

Sb  n 

1.52
Sb 
2
00  517.37 
t 11339.2395   
0.014  24 

t 0
Sb  0.014

SSE
Se 
Value of t is 0 < 1.714 n2

So we donot reject H₀
51.2
Se 
24  2 Se  1.52

Conclusion
Null hypothesis is that slope of X1 is less than zero, and but after testing we get that the slope of X1 is
less than zero and we donot reject H0

It is the outfitters Regression hypothiese.

H0 :   0
H1 :   0,   0,   0

T -distribution
 t v ,
t23,0.05
t  1.714

1.714

If t > 1.714 then we reject ho otherwise we do not reject ho

n2
tr
1 r2

24  2
t 1
11

t  4.69

T is 4.69 > 1.714

So we reject H₀

Conclusion
Null hypothesis is
H 0 :   0 , and but after testing we get that H1 :   0,   0,   0 and we reject H
0

Hypotheses testing of equation of regression

H₀: b1=b2  0.05

H₁: b1≠b2

f N , D ,
N  k 1  3 1  2
D  n  1  24  1  23

f 2,23,0.05  19.45

If f > 19.45 we reject H₀

So we have f in regression ANOVAs is 4.03 < 19.45 we do not reject H₀

Conclusion
Null hypothesis is H₀ is b1 = b2 and do not reject our H₀ so its mean our Equation is not significant.

Reference
http://www.outfitters.com.pk/

http://crossroads.pk/

http://en.wikipedia.org/wiki/Mean

http://en.wikipedia.org/wiki/Variance

http://en.wikipedia.org/wiki/Standard_deviation

http://en.wikipedia.org/wiki/Multiple_regression