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Individual Assignment 02 – Regression Analysis
Sunil Shrestha (2416874)
University Canada West
Business Analytics
BUSI 650(HBD-FALL24-41)
Manish Lamsal
November 8th, 2024
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Individual Assignment 02 – Regression Analysis
Introduction
The report contains the data of a manufacturing company which has provided four
variables. Machine work time, Age of the machine, Machine Idle Time and Hourly Cost of
running a machine. Here, the following figure contains data provided of 18 machine.
Figure 1: Data Variables of the given Company
Observation and Findings
1.1 Dependent and Independent 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.
1.2 Correlation Analysis for all Inputs and Outputs
Figure 2: Correlation Analysis of the table
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Correlation Analysis is a tool used to assess the strength of connection between two
variables. Here, Price of running a machine is checked with Age of Machine, Machine Idle Time
and Machine Work Time. The figure above shows two strong positive correlations with price of
running a machine, they are age of machine and machine idle time, with high correlation, 0.93
and 0.95, whereas remaining machine work time has almost no correlation.
1.3 Univariate Analysis for Hourly Cost of running a machine and Machine Work Time
Figure 3: Univariate Analysis for Price of running a machine and Machine Work Time
The graph shows the positive linear function, the machine work time increases the hourly
cost of running the machine, the graph displays univariate function i.e. Price of Running a
Machine =0.2314*Machine Work Time+21.558. As stated the machine work time is 30, then
price of running a machine would be $ 28.5 but the probability of the prediction is low due to the
average error for the given data is 54.25%.
1.4 Univariate Analysis for Hourly Cost of running a machine and Age of Machine
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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
from the figure below 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
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 Price of the machine= 5.0313*Age of Machine
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+7.5473. Using this equation, we can calculate that if the machine's idle time is 2, the cost of
running it is 17.51. The chart shows the total error for all observations, as well as the average
error for the supplied data, indicating that the forecast is reliable.
1.6 Multivariate Regression Analysis
Figure 6: 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
Figure 8: Calculation of Error
When the machine is 15 years old and idle for 10 minutes, the cost of running it is
$42.97. Figure 8 depicts all of the observations' errors, with an average error of 10.61%.
