1. Example on the Concept of Regression . observation . . 1 2 3 4 .
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Example on the Concept of Two-Factor Analysis
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IME 301, Feb. 99

2. Use Regression or Two-Factor Analysis to check if:
We can conclude any relation between factors. (one
or two factors on another factor)
We can judge on reliability of our conclusion.
IME 301, Feb. 99

3. ei = residual = Yi - Regression Analysis Y = + X +
Y = dependent variable, response variable
X = independent variable, regressor, predictor
= error
regression coefficients:
= intercept
= slope
Yi = observed Y at point Xi
= predicted Y at point Xi , = Xi
ei = residual = Yi -
Method of Least Square: minimize sum of ei2
IME 301

4. Hypothesis testing on slope:
H0 : = (That is there is no relationship between X and Y)
H1 : (That is there is some relationship between X and Y)
Find t statistics and P-value from Excel output for discussion. Then fail to reject H0 if OR
IME 301

5. Common abuses of Regression:
Variables completely unrelated
Not valid for extrapolation
IME 301