Scribd
Upload
12 views2 pages

Regression Analysis in Business Decisions

Regression analysis helps managers make decisions by identifying relationships between dependent and independent variables and predicting how changes in independent variables impact outcomes. It allows managers to simplify complex situations, build models of key relationships, test those models, and use them to find solutions. Regression analysis identifies the most influential factors and how they affect outputs. This helps managers understand relationships between variables and make better informed decisions.

Uploaded by

RakeshJoshi
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
12 views2 pages

Regression Analysis in Business Decisions

Regression analysis helps managers make decisions by identifying relationships between dependent and independent variables and predicting how changes in independent variables impact outcomes. It allows managers to simplify complex situations, build models of key relationships, test those models, and use them to find solutions. Regression analysis identifies the most influential factors and how they affect outputs. This helps managers understand relationships between variables and make better informed decisions.

Uploaded by

RakeshJoshi
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

Question 3: What is the significance of Regression Analysis?

How does
it help a manager in the decision making process?
A n s w e r :
Regression analysis is a powerful technique for studying relationship between
dependent variables (i.e., output, performance measure) and independent variables
(i.e., inputs, factors, decision variables). Summarizing relationships among the
variables by the most appropriate equation (i.e., modeling) allows us to predict or
identify the most influential factors and study their impacts on the output for any
changes in their current values.
Unlie the deterministic decision!maing process, such as linear optimization
by solving systems of equations, "arametric systems of equations and in
decision maing under pure uncertainty, the variables are often more numerous
and more difficult to measure and control. #owever, the steps are the same. $hey
are%
&. Simplification
'. (uilding a decision model
). $esting the model
*. Using the model to find the solution%
+t is a simplified representation of the actual situation
+t need not be complete or e,act in all respects
+t concentrates on the most essential relationships and ignores the
less essential ones.
+t is more easily understood than the empirical (i.e., observed)
situation, and hence permits the problem to be solved more
readily with minimum time and effort.
-. +t can be used again and again for similar problems or can be modified.
.ortunately the probabilistic and statistical methods for analysis and decision maing
under uncertainty are more numerous and powerful today than ever before. $he
computer maes possible many practical applications. / few e,amples of business
applications are the following%
/n auditor can use random sampling techniques to audit the accounts
receivable for clients.
/ plant manager can use statistical quality control techniques to assure the
quality of his production with a minimum of testing or inspection.
/ financial analyst may use regression and correlation to help understand the
relationship of a financial ratio to a set of other variables in business.
/ maret researcher may use test of significace to accept or re0ect the
hypotheses about a group of buyers to which the firm wishes to sell a
particular product.
/ sales manager may use statistical techniques to forecast sales for the
coming year.

You might also like