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Individual Assignment 02 – Regression Analysis

Sadhana Shrestha (2416874)

University Canada West

Business Analytics BUSI 650(HBD-FALL24-41)

Manish Lamsal

November 8th, 2024

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Table of Contents

List of Figures.........................................................................................................................3

List of Tables..........................................................................................................................4

Introduction to Data Analysis of Manufacturer Machine.......................................................5

Observation and Findings.......................................................................................................5

1.1 Dependent (output) and Independent variables (input)..........................................5

1.2 Correlation Analysis for all Inputs and Outputs....................................................6

1.3 Univariate Analysis for Hourly Cost of running a machine and Machine work

time 6

1.4 Univariate Analysis for Hourly Cost of running a machine and Age of Machine.8

1.5 Univariate Analysis for Price of running a machine and Machine Idle Time.......9

1.6 Multivariate Regression Analysis........................................................................10

Calculation of Error for each observation.................................................................11

References.............................................................................................................................12
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List of Figures

Figure 1: Correlation Analysis of the table......................................................................................5

Figure 2: Univariate Analysis for Price of running a machine and Machine Work Time...............5

Figure 3: Univaraite Analysis Table................................................................................................6

Figure 4: Univariate Analysis of Price of running a machine and Age of the Machine..................7

Figure 5: Univariate Analysis for Price of running a machine and Machine Idle Time................8

Figure 6:1st Regression Analysis....................................................................................................9

Figure 7: Final Regression Analysis................................................................................................9

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List of Tables

Table 1: Classification of Variables................................................................................................5

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Introduction to Data Analysis of Manufacturer Machine

Regression Analysis is a simple and statistical method to understand and quantify the

relationship between two variables or more (Simplilearn, n.d.). It helps any business to estimate

and understand the impacts of one or more independent variable on a dependent variable.

Here, the data provided where is collected for 18 machine, and the data contains four

variables, Machine work time, Age of the machine, Machine Idle Time and Hourly Cost of

running a machine.

Observation and Findings

1.1 Dependent (output) and Independent variables (input)

Dependent Independent Independent Independent

Price of running a Age of the Machine work Machine Idle time
machine machine time
66.9 56 57 12
61.1 49 39 10.2
45 40 38 8.1
44.3 45 19 4.2
39 33 35 5
36.5 30 82 6.1
36.2 33 32 5.8
35 31 33 6
29 29 47 5
24.3 15 29 2.8
23 19 45 3.6
22.3 16 61 3.2
22.1 15 27 2.5
19.1 14 23 2.3
18 14 47 1.7
18 33 10 3.6
17.3 11 36 1.9
12.5 4 24 1.5
8 2 42 0.8
Table 1: Classification of Variables

From table 1, we can see that there are three independent and one dependent variable.

The Independent variable or input in this analysis are Machine work time, Age of the machine,

Machine Idle Time and the one dependent variables is Price of running a machine.
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1.2 Correlation Analysis for all Inputs and Outputs

Figure 1: Correlation Analysis of the table

Correlation Analysis can be defined as a measure to test strength correlation between two

variables (QuestionPro, n.d). From the figure above, we can see that price of running a machine

has strong positive correlation with two independent variables, Age of the machine and Machine

Idle time, with almost perfect correlation i.e. 0.93 and 0.95 respectively while remaining

Machine work time has almost no correlation with Machine work time, dependent variable.

1.3 Univariate Analysis for Hourly Cost of running a machine and Machine work time

Figure 2: Univariate Analysis for Price of running a machine and Machine Work Time

The upper moving graph shows the positive linear function as the machine work time

increases, the hourly cost of running the machine also increases, the graph displays univariate

function i.e. y=0.2314x+21.558 which can be interrupted as Price of Running a Machine

=0.2314*Machine Work Time+21.558.

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Figure 3: Univaraite Analysis Table

By using the function above, if the machine work time is 30, then price of running a

machine would be $ 28.5 per hour. But from the table above, we can see the average error for the

given data is 54.25% which means the probability of the prediction is low.
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1.4 Univariate Analysis for Hourly Cost of running a machine and Age of Machine

The figure shows the another positive linear function as the age of machine increases, the

price of running the machine also increases. The graph displays univariate regression function

i.e. Y=0.9722x+5.3795 which can be interrupted as Price of running a machine= 0.9722* Age

of Machine+5.3795 and the average error for given data is 13.65%, there is less chance of

prediction being incorrect.

Figure 4: Univariate Analysis of Price of running a machine and Age of the Machine
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1.5 Univariate Analysis for Price of running a machine and Machine Idle Time

Figure 5: Univariate Analysis for Price of running a machine and Machine Idle Time

The figure above shows upper moving graph which means the another positive linear

function as the machine idle time increases, the price of running the machine also increases, the

graph displays univariate regression function i.e. y=5.0313x+7.5473 which can be interrupted as

Hourly Cost= 5.0313*Age of Machine +7.5473. Using this equation, we can figure out if the

machine idle time is 2, then price of running the machine is 17.51. The figure displays error of

all the observation and as well as average error for given data is 13.05% which means the

prediction is dependable.
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1.6 Multivariate Regression Analysis

Figure 6:1st Regression Analysis

Here, we can see that P-value of Machine work is greater than 5% or 0.05 which means

that the regression analysis is invalid. We have to redo the regression analysis without Machine

Work time.

Figure 7: Final Regression Analysis

Here, as per the figure 7, we can find that Final multivariate function is

Y=0.4172*X1+3.1236*X2+5.4739.
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Calculation of Error for each observation

When the age of the machine is 15 and machine idle time is 10, then the Price of running

a machine would $ 42.97.

As Per the figure 7 has listed all the error for the observation and average error can be

seen as 10.61%. while the maximum and minimum error can be seen 69.37% and 0.87%

respectively.
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References

National Center for Education Statistics. (n.d.). Variables. U.S. Department of

Education. https://nces.ed.gov/nceskids/help/user_guide/graph/variables.asp

QuestionPro. (n.d.). Correlation analysis. QuestionPro.

https://www.questionpro.com/features/correlation-analysis.html

Simplilearn. (n.d.). Regression analysis in Excel. Simplilearn.

https://www.simplilearn.com/tutorials/excel-tutorial/regression-analysis
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Appendices