Simple Linear Regression Assignment Harvard Case Solution & Analysis

Simple Linear Regression Assignment Case Solution

Assignment Questions

Question 1

The correlation analysis has been performed as shown in the excel spreadsheet for the first year sales and the life to date sales. The correlation coefficient between both the variables is found to be 95%. This is a positive and high correlation. The scatterplot has also been created in the excel spreadsheet. From the business point of view, this means that the majority of the sales of the video games take place in its first year of sales as it shows a strong and high correlation with the life to date sales of the video games.

Question 2

a). The simple linear regression model has been performed by taking life to date sales in million as the dependent variable and the review score as the independent variable. The regression model would be as follows:

b). The coefficient for the review score is 0.14. This would mean that if the review score by a customer is increased by 1 point, then the Life to date sales for the video game tend to increase by 14%.
c). First of all, if we look at the correlation between the review score and the life to date sales of the video games, then it is 19%, which is positive but there is weak correlation. However, in order to look at the fit of the model, we need to look at the adjusted r square value. This value is 4%, which means the percentage variation in sales of video games by the review scores is 4%.

The null and the alternative hypothesis for this model would be as follows:

Ho: Review Score does not have a significant impact upon the life to date sales.
H1: Review Score has a significant impact upon the life to date sales.
If we look at the significant value of the F-test which is 0%, then it could be interpreted that the regression model is fit and the impact of review scores on life to date sales is significant. Therefore, the null hypothesis would be rejected and the alternative hypothesis would be accepted here. The quality of this regression model is high and would help the management in making significant business decision for the company.
d). Based on the above detailed analysis, it could be said that review score is a good predictor of the performance of the performance of the game as it results in higher sales for the video games which ensures that the performance of the games is being improved...................

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