Errata for the solution set

Hi class,

There is an erratum to the prepared solution set. Pls find my response below to the email Swati originally sent.

Hi Swati,

1) >> While calculating the predicted sales, why has the component for “light” (-2.205*0.47) been included when specification (model) 1 does not state “light” as an independent variable.

You are right. The expression for specification (1) misses Light. I simply looked up the table results for coeffs and multiplied mean value with coeffs directly.

That also explains why average size has been missed. The mean value for size should be taken is 144. I pasted that expression directly into excel, hence my answer is wrong.

The correct answers for part (j) should be:

(i) Predicted sales = = 66.773 + 4.419*0 + 1.792*1 -2.205*0.47 +0.015*144 -3.174*7.8757 +2.148*0.5 = 45.765

(ii) Predicted sales = = 66.773 + 4.419*1 + 1.792*0 -2.205*0.47 +0.015*144 -3.174*7.8757 +2.148*0.5 = 48.3921


Am surprised nobody – not a single person – caught this error so far. Thanks for pointing this out! Appreciate it. Shall fwd this email to the entire class, just to make sure, everyone gets it.

>>When calculating the predicted sales, can we take the mean value for ‘size’ given as 144 in descriptive statistics or do we need to find the hidden component of size-square also for it. The mean value of size that has been plugged in the formula has somehow got deleted from the solution key. Reverse calculation show the mean for size taken in this case to be 1641.

No, spec (1) has no quadratic term. So no need to try to find size square. Besides, mean of size square needn’t have the same value as square of mean size.

Sudhir