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A CEO of a large company would like to determine if he should beplacing more money allotted in the budget next year for television advertising of a newbabybottle marketed for controllingreflux and reducing gas.HE wonders whether there is a strongrelationship between the amount of money spent on television advertising for this newbabybottle calledGentle Bottle and the number of orders received. The manufacturing process of thisbaby bottle is very difficult and requiresadvanced quality controlso the CEO would prefer togenerate a stable number oforders. The cost of advertising is always an important considerationin the phase I roll-out of a newbaby bottle. Data that have been collected over the past 20months indicate the amount of money spent of television advertising and the number of ordersreceived. The use of linear regression is a critical tool for a manager’s decision-making ability. Pleasecarefully read the example below and try to answer the questions in terms of the problemcontext. use of linear regression is a critical tool for a manager’s decision-making ability. Pleasecarefully read the example below and try to answer the questions in terms of the problemcontext. The results are as follows: 15 60,030 1,934,000 16 79,210 2,853,000 17 65,770 1,625,000 18 84,530 3,778,000 19 79,760 2,999,000 20 82,640 3,834,000 a. Set up a scatter diagram and calculate the associated correlationcoefficient. Discuss how strong you think the relationship is between theamount of money spent on television advertising and the number of ordersreceived. Please use the Correlation procedures within Excel underTools> Data Analysis.The Scatterplot can more easily be generated using theChart procedure.Set up a scatter diagram and calculate the associated correlation coefficient. Discuss how strong you think the relationship is between the amount of money spent on television advertising and the number of orders received. Please use the Correlation procedures within Excel under Tools > Data Analysis. The Scatterplot can more easily be generated using the Chart procedure. NOTE: If you do not have the Data Analysis option under Tools you must install it. You need to go to Tools select Add-ins and then choose the 2 data toolpak options. It should take about a minute. b. Assuming there is a statistically significant relationship, use the least squares method to find the regression equation to predict the advertising costs based on the number of orders received. Please use the regression procedure within Excel under Tools > Data Analysis to construct this equation. c. Interpret the meaning of the slope, b1, in the regression equation. d. Predict the monthly advertising cost when the number of orders is 1,800,000. (Hint: Be very careful with assigning the dependent variable for this problem) e. Compute the coefficient of determination, r2, and interpret its meaning.f. Compute the standard error of estimate, and interpret its meaning. g. Do you think that the company should use these results from the regression to base any corporate decisions on?….explain fully.
