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    Random Motors Project Submission: Name - Ruksar Iftekharalam Mir

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    Ruksaar Mir
    The document discusses regression analyses conducted to predict sales and profits for two new car models, Rocinante36 and Marengo32, based on specifications like price, mileage, and top speed. Null and alternative hypotheses are formulated to test if the models meet design specifications. P-values are calculated and it is concluded that the specifications are met. Type II error is considered more expensive for the manufacturer. Regression equations are developed and used to predict sales and profits for each model, with Rocinante36 predicted to be more profitable. Removing insignificant variables from the regression models slightly increases the adjusted R-square values.

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    Random Motors Project Submission: Name - Ruksar Iftekharalam Mir

    Uploaded by

    Ruksaar Mir
    150 views10 pages
    The document discusses regression analyses conducted to predict sales and profits for two new car models, Rocinante36 and Marengo32, based on specifications like price, mileage, and top speed. Null and alternative hypotheses are formulated to test if the models meet design specifications. P-values are calculated and it is concluded that the specifications are met. Type II error is considered more expensive for the manufacturer. Regression equations are developed and used to predict sales and profits for each model, with Rocinante36 predicted to be more profitable. Removing insignificant variables from the regression models slightly increases the adjusted R-square values.

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    The document discusses regression analyses conducted to predict sales and profits for two new car models, Rocinante36 and Marengo32, based on specifications like price, mileage, and top speed. Null and alternative hypotheses are formulated to test if the models meet design specifications. P-values are calculated and it is concluded that the specifications are met. Type II error is considered more expensive for the manufacturer. Regression equations are developed and used to predict sales and profits for each model, with Rocinante36 predicted to be more profitable. Removing insignificant variables from the regression models slightly increases the adjusted R-square values.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    150 views10 pages

    Random Motors Project Submission: Name - Ruksar Iftekharalam Mir

    Uploaded by

    Ruksaar Mir
    The document discusses regression analyses conducted to predict sales and profits for two new car models, Rocinante36 and Marengo32, based on specifications like price, mileage, and top speed. Null and alternative hypotheses are formulated to test if the models meet design specifications. P-values are calculated and it is concluded that the specifications are met. Type II error is considered more expensive for the manufacturer. Regression equations are developed and used to predict sales and profits for each model, with Rocinante36 predicted to be more profitable. Removing insignificant variables from the regression models slightly increases the adjusted R-square values.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 10

    Random Motors Project

    Submission
    Name - Ruksar Iftekharalam Mir
    Q-1a) Formulate the null hypotheses to check whether the new models are
    performing as per the desired design specifications.

    For Rocinante36: For Marengo32:

    Mileage HO : Average Mileage of Mileage HO : Average Mileage of


    Rocinante36 (μ)= 22 Km/Liter Marengo (μ)= 15 km/Liter

    Top speed HO : Top speed of Top speed HO : Top speed of


    Rosinante (μ)= 140 km/hr. Marengo(μ)= 210 Km/hr.
    Q-1b) Formulate the alternate hypotheses to check whether the new models
    are performing as per the desired design specifications.

    For Rocinante36: For Marengo32:

    Mileage H1 : Average Mileage of Mileage H1 : Average Mileage of


    Rocinante36 (μ)≠ 22 km/liter Marengo (μ)≠ 15 km/liter

    Top speed H1 : Top speed of Top speed H1 : Top speed of


    Rosinante (μ)≠ 140 km/hr. Marengo (μ)≠ 210 km/hr.
    Q-2) In order to comment on whether the design specifications are being
    matched or not, perform relevant hypothesis tests and calculate the p-value for
    each. What will you conclude? Assume you are performing the tests at 95%
    confidence level.
    For Rocinante36: Conclusion

    p-value for mileage = 0.08 We Fail to Reject the Null Hypothesis,


    p-value for top speed = 0.43 as p value is greater than 0.05.

    For Marengo32:

    p-value for mileage = 0.13


    p-value for top speed = 0.37
    Q-3) You have learnt about the possible errors that might result from the
    hypothesis tests. What type of error is more expensive for Random motors
    based on the hypothesis they are testing? Why? Assume that you need to
    refund all your customers if your cars deviate from specifications.
    The type of error which is more Reason:
    expensive:
    If type II error occurs the Speed and Mileage set
    by Random Motors will not meet. Which will
    Type II error is more expensive. make customer furious, and they will ask refund.

    This can lead to a damaged reputation, reduced


    The mileage and top speed of proposed revenue, and plenty of negative reviews.
    models will not deliver as per the said
    specifications.
    Q-4) Develop a regression equation for each model at 95 percent confidence
    level. From the regression equation predict the sales of the two models.
    Develop the regression equation for the Develop the regression equation for the
    Rocinante models and Predict the number Marengo models and Predict the number of
    of unit sales of Rocinante36 model? unit sales of Marengo32 model?

    Regression coefficients Regression coefficients

    Price: -0.795 Price: -0.19


    Mileage: 8.306 Mileage: 0.04
    Top speed: -0.019 Top speed: 0.22
    Equation: 50.7231 - 0.7950 * price + 8.3063 * Equation: 13.44764+(-0.18672)*Price +
    mileage
    0.22080* Top Speed
    Predicted Sales(in units):
    Predicted Sales(in units):
    227897 25265
    Q-5) Based on sales prediction, what is the overall predicted profit for
    Rocinante36 model and Marengo32 model ?
    Overall predicted profit
    Rocinante36 Model:
    Predicted Profit =Predicted Sales * (Price – Manufacturing cost)
    Predicted Profit = 227897 * (7L -6L)
    Predicted Profit in Lakhs = 227897 L
    Predicted Profit in Crores = 2278.97 Cr
    Predicted Profit in Rs = ₹ 2,27,89,671,000
    Marengo32 Model:
    Predicted Profit =Predicted Sales * (Price – Manufacturing cost)
    Predicted Profit = 25265 *(41L -33L)
    Predicted Profit = 202118 L
    Predicted Profit in Crores = 2021.18 Cr
    Predicted Profit in Rs = ₹ 2,02,11,879,200
    Q-6) As a CEO, you wish to invest only in the model which is predicted to be
    more profitable. Which model among Rocinante36 and Marengo32 will you
    invest in?

    Which model you will invest in?

    I will Invest in Rocinante36.


    Q-7) Now you must have derived the regression equation for both models, Rocinante and
    Marengo. Now if you increase the price of Rocinante36 and Marengo32 by 1 lac rupees
    each, which car will have a higher impact on the sales due to increase in price? Give proper
    logic for your answer. You can consider that all other specifications such as mileage and top
    speed remain the same for both models.

    Which car is most affected by a price increase? Why?

    Rocinante36 would be affected on the sales when we increase the price by 1 lakh . As
    shown on excel sheets it would get down sales of Rosinante 36 by around 795 units.
    The same price increase causes Marengo 32 to go down in sales unit by 187 units.
    Q-8) After developing the regression equation for both models (Rocinante and Marengo), if you
    analyse the p values for coefficients in the regression results, you will notice that some of the
    regression variables (top speed, mileage and price) are insignificant. Remove the insignificant
    regression variables from your selection and rebuild the regression model using only significant
    variables. Compare the Adjusted R square value for the new and old regression model. Do you
    notice any change in Adjusted R square value? If yes, explain the reason for the change.

    Is there a change on Adjusted R square Value? If so, Why?

    There is a slight change in Adjusted R square value. As we remove


    insignificant value there is a slight increase.

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