Generate a scatterplot for income ($1,000) versus credit balance

Course
Project: AJ DAVIS DEPARTMENT STORES

Introduction

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AJ DAVIS is
a department store chain, which has many credit customers and wants to find out
more information about these customers. A sample of 50 credit customers is
selected with data collected on the following five variables.

Location (rural, urban, suburban)
Income (in $1,000’s—be careful with this)

Size (household size, meaning number of
people living in the household)
Years (the number of years that the
customer has lived in the current location)
Credit balance (the customers current
credit card balance on the store’s credit card, in $).

The data is
available in Doc Sharing Course Project Data Set as an Excel file. You are to
copy and paste the data set into a minitab worksheet.

PROJECT PART A: Exploratory Data Analysis

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Open the file MATH533 Project
Consumer.xls from the Course Project Data Set folder in Doc Sharing.
For each of the five variables, process,
organize, present, and summarize the data. Analyze each variable by itself
using graphical and numerical techniques of summarization. Use minitab as
much as possible, explaining what the printout tells you. You may wish to
use some of the following graphs: stem-leaf diagram, frequency or relative
frequency table, histogram, boxplot, dotplot, pie chart, bar graph.
Caution: Not all of these are appropriate for each of these variables, nor
are they all necessary. More is not necessarily better. In addition, be
sure to find the appropriate measures of central tendency and measures of
dispersion for the above data. Where appropriate use the five number
summary (the Min, Q1, Median, Q3, Max). Once again, use minitab as
appropriate, and explain what the results mean.
Analyze the connections or relationships
between the variables. There are 10 pairings here (location and income,
location and size, location and years, location and credit balance, income
and size, income and years, income and balance, size and years, size and
credit balance, years and Credit Balance). Use graphical as well as
numerical summary measures. Explain what you see. Be sure to consider all
10 pairings. Some variables show clear relationships, while others do not.

Prepare your report in Microsoft Word
(or some other word processing package),integrating your graphs and tables with text
explanations and interpretations.Be sure that you have graphical and numerical back up for
your explanations and interpretations. Be selective in what you include in
the report. I’m not looking for a 20-page report on every variable and
every possible relationship (that’s 15 things to do). Rather, what I want
you do is to highlight what you see for three individual variables
(no more than one graph for each, one or two measures of central
tendency and variability (as appropriate), and two or three sentences of
interpretation). For the 10 pairings, identify and report only on three of the pairings,
again using graphical and numerical summary (as appropriate), with
interpretations. Please note that at least one of your pairings must include location
and at least one of your pairings must not include location.

All DeVry University policies are in
effect, including the plagiarism policy.
Project Part A report is due by the end
of Week 2.
Project Part A is worth 100 total
points. See grading rubric below.

Submission:
The report from Part 4, including
all relevant graphs and numerical analysis along with interpretations
Format
for report:

Brief introduction
Discuss your first individual variable,
using graphical, numerical summary, and interpretation
Discuss your second individual variable,
using graphical, numerical summary, and interpretation
Discuss your third individual variable,
using graphical, numerical summary, and interpretation
Discuss your first pairing of variables,
using graphical, numerical summary, and interpretation
Discuss your second pairing of
variables, using graphical, numerical summary, and interpretation
Discuss your third pairing of variables,
using graphical, numerical summary, and interpretation
Conclusion

Project Part A: Grading Rubric

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Category

Points

%

Description

Three
Individual Variables
12
points each

36

36

graphical
analysis, numerical analysis (when appropriate) and interpretation

Three
Relationships
15
points each

45

45

graphical
analysis, numerical analysis (when appropriate), and interpretation

Communication
Skills

19

19

writing,
grammar, clarity, logic, cohesiveness, adherence to the above format

Total

100

100

A
quality paper will meet or exceed all of the above requirements.

Project Part B: Hypothesis Testing and Confidence Intervals

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Your manager
has speculated the following.
a. The
average (mean) annual income was greater than $45,000.
b. The
true population proportion of customers who live in a suburban area is less
than 45%.
c. The
average (mean) number of years lived in the current home is greater than 8
years.
d. The
average (mean) credit balance for rural customers is less than $3,200.

Using the sample data, perform the
hypothesis test for each of the above situations in order to see if there
is evidence to support your manager’s belief in each case A–D. In each
case, use the Seven Elements of a Test of Hypothesis in Section 6.2 of
your text book with α = .05, and explain your conclusion in simple terms. Also,
be sure to compute the p-value and interpret.
Follow this up with computing 95%
confidence intervals for each of the variables described in A–D, and again
interpreting these intervals.
Write a report to your manager about the
results, distilling down the results in a way that would be understandable
to someone who does not know statistics. Clear explanations and interpretations
are critical.
All DeVry University policies are in
effect, including the plagiarism policy.
Project Part B report is due by the end
of Week 6.
Project Part B is worth 100 total
points. See the grading rubric below.

Submission:
The report from Part 3 and all of
the relevant work done in the hypothesis testing (including minitab) in 1 and
the confidence intervals (minitab) in Part 2 as an appendix
Format
for report:

Summary report (about one paragraph on
each of the speculations, A–D)
Appendix with all of the steps in
hypothesis testing (the format of the Seven Elements of a Test of
Hypothesis, in Section 6.2 of your text book) for each speculation A–D, as
well as the confidence intervals, including all minitab output

Project Part B: Grading Rubric

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Category

Points

%

Description

Addressing
each speculation—20 points each

80

80

hypothesis
test, interpretation, confidence interval, and interpretation

Summary
report

20

20

one
paragraph on each of the speculations

Total

100

100

A
quality paper will meet or exceed all of the above requirements.

Project Part C: Regression and Correlation Analysis

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Using
MINITAB, perform the regression and correlation analysis for the data on income(Y),
the dependent variable, and credit balance (X), the independent
variable, by answering the following.
1.
Generate a scatterplot for income ($1,000)
versus credit balance($), including the graph of the best fit line. Interpret.
2.
Determine the equation of the best fit
line, which describes the relationship between income and credit balance.
3.
Determine the coefficient of correlation.
Interpret.
4.
Determine the coefficient of determination.
Interpret.
5.
Test the utility of this regression model
(use a two tail test with α =.05). Interpret your results, including the
p-value.
6.
Based on your findings in 1–5, what is
your opinion about using credit balance to predict income? Explain.
7.
Compute the 95% confidence interval for beta-1
(the population slope). Interpret this interval.
8.
Using an interval, estimate the average
income for customers that have credit balance of $4,000. Interpret this
interval.
9.
Using an interval, predict the income for
a customer that has a credit balance of $4,000. Interpret this interval.
10.
What can we say about the income for a customer that has a credit balance of
$10,000? Explain your answer.
In an
attempt to improve the model, we attempt to do a multiple regression model
predicting income based on credit balance, years, and size.
11.
Using MINITAB, run the multiple regression analysis using the variables credit balance,
years, and size to predict income. State the equation for this multiple
regression model.
12.
Perform the global test foruUtility (F-Test). Explain your conclusion.
13.
Perform the t-test on each independent variable. Explain your conclusions and
clearly state how you should proceed. In particular, state which independent
variables should we keep and which should be discarded.
14.
Is this multiple regression model better than the linear model that we
generated in parts 1–10? Explain.
All DeVry
University policies are in effect, including the plagiarism policy.
15.
Project Part C report is due by the end of Week 7.
16.
Project Part C is worth 100 total points. See the grading rubric below.
Summarize
your results from 1–14 in a report that is 3 pages or less in length and
explains and interprets the results in ways that are understandable to someone
who does not know statistics.
Submission:
The summary report + all of the
work done in 1–14 (Minitab Output + interpretations) as an appendix
Format:

Summary Report
Points 1–14 addressed with appropriate
output, graphs, and interpretations. Be sure to number each point 1–14.

Project Part C: Grading Rubric

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Category

Points

%

Description

Questions
1–12 and 14
5
points each

65

65

addressed
with appropriate output, graphs, and interpretations

Question
13

15

15

addressed
with appropriate output, graphs, and interpretations

Summary

20

20

writing,
grammar, clarity, logic, and cohesiveness

Total

100

100

A
quality paper will meet or exceed all of the above requirements.

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