Guide to Using Excel For Basic
Statistical Applications
To Accompany
Business Statistics: A Decision Making
Approach, 6th Ed.
Chapter 13:
Introduction to Linear Regression and
Correlation Analysis
By
Groebner, Shannon, Fry, & Smith
Prentice-Hall Publishing Company
Copyright, 2005
Chapter 13
Excel Examples

Correlation Coefficient
Midwest Distribution
 Regression Analysis
Midwest Distribution
Regression Analysis
Fitzpatrick and Associates
 Regression Analysis for Description
Car Mileage
•
Chapter 13
Excel Examples
 Regression Analysis
for Prediction
Freedom Hospital
 Residual Analysis
Freedom Hospital
Correlation Analysis Midwest Distribution
Issue:
The company wants to analyze the
relationship between salary and years with the
company.
Objective:
Use Excel to help test whether a
significant relations exists between salary and
years with the company. Data file is Midwest.xls
Correlation Analysis – Midwest Distribution.
Open File Midwest.xls
To construct the scatter diagram
see the Personal Computers
tutorial in Chapter 2.
Correlation Analysis – Midwest Distribution.
First click on
Tools, then
Data Analysis
and finally on
Correlation.
Correlation Analysis – Midwest Distribution.
Define ranges for Variables. Click
on O.K.
Correlation Analysis – Midwest Distribution.
The Excel
output shows
the correlation
between Sales
and Years with
Midwest.
Regression Analysis Midwest Distribution
Issue:
The marketing manager wants to determine
the relationship between sales and years with the
company.
Objective:
Use Excel to test whether the apparent linear
relationship is statistically significant. Data file is
Midwest.xls
Regression Analysis – Midwest Distribution
Open File Midwest.xls
Regression Analysis – Midwest Distribution
Click on
Tools, then
Data Analysis
and finally
Regression
Regression Analysis – Midwest Distribution
Identify Data ranges for the X
and Y variables. Click on O.K.
Regression Analysis – Midwest Distribution
The output shows the
correlation coefficient
and the coefficients for
the regression equation.
Regression Analysis Fitzpatrick & Associates
Issue:
The Fitzpatrick analysts want to model the
relationship between profits and number of
employees.
Objective:
Use Excel to test whether the apparent linear
relationship is statistically significant. Data file is
Fortune 50.xls
Regression Analysis – Fitzpatrick & Associates
Open File Fortune 50.xls
Regression Analysis – Fitzpatrick & Associates
Click on
Chart Wizard
button, then
XY Scatter
Regression Analysis – Fitzpatrick & Associates
Define Data ranges in chart
wizard. Note: Excel requires the
data to be in adjacent columns
with the X variable on the left.
Regression Analysis – Fitzpatrick & Associates
Finish steps in Chart
Wizard.
Regression Analysis – Fitzpatrick & Associates
To find regression model,
return to Data sheet.
Regression Analysis – Fitzpatrick & Associates
Click on
Tools, then
Data Analysis
and finally
Regression
Regression Analysis – Fitzpatrick & Associates
Identify Data ranges for the X
and Y variables. Click on O.K.
Regression Analysis – Fitzpatrick & Associates
The output shows the
correlation coefficient
and the coefficients for
the regression equation.
Regression Analysis Car Mileage
Issue:
Analysts want to determine the relationship
between EPA highway mileage and automobile
horsepower.
Objective:
Use Excel to test whether the apparent linear
relationship is statistically significant. Data file is
Automobiles.xls
Regression Analysis – Car Mileage
Open File Automobiles.xls
Regression Analysis – Car Mileage
Click on
Tools, then
Data Analysis
and finally
Regression
Regression Analysis – Car Mileage
Identify Data ranges for the X
and Y variables. Click on O.K.
Regression Analysis – Car mileage
The output shows the
correlation coefficient
and the coefficients for
the regression equation.
Regression Analysis for
Prediction - Freedom Hospital
Issue:
The administrator has been requested by the
hospital’s board of directors to develop a model that
can be used to predict the total charges for a geriatric
patient.
Objective:
Use Excel to develop a statistically significant
prediction model. Data file is Patients.xls
Regression Analysis for Prediction – Freedom Hospital
Open File Patients.xls
File contains values for
138 patients.
Regression Analysis for Prediction – Freedom Hospital
To develop the
model first
click on Tools,
then Data
Analysis and
finally on
Regression.
Regression Analysis for Prediction – Freedom Hospital
Define range for
Variables and
select the Alpha
value (.05). Click
on O.K.
Regression Analysis for Prediction – Freedom Hospital
The Excel output shows both
the correlation coefficient and
the coefficients of the linear
regression model.
Regression Analysis for Prediction – Freedom Hospital
To determine
prediction
interval,
return to data
sheet, click on
PHStat, then
Regression
and finally
Simple Linear
Regression.
Regression Analysis for Prediction – Freedom Hospital
Specify the
Cell Range for
the X and Y
variables.
Then click the
Confidence
Interval box
and specify the
value for X
and the
Confidence
Level.
Regression Analysis for Prediction – Freedom Hospital
The output shows
the 95%
confidence
interval for both
the Average
Value of Y and
for an Individual
Value of Y.
Residual Analysis Freedom Hospital
Issue:
The administrators want to determine whether
the prediction model developed is a valid use of
regression analysis or whether it violates some of the
necessary assumptions. Objective:
Use Excel to analyze the residuals from the
model. Data file is Patients.xls
Residual Analysis – Freedom Hospital
Open file Patients.xls
Residual Analysis – Freedom Hospital
First click on Tools, then
Data Analysis and then
on Regression.
Residual Analysis – Freedom Hospital
Define range for X and Y
Variables and then check
boxes for Residuals and
Residual Plots.
Residual Analysis – Freedom Hospital
At the bottom of the
regression output
(note the row
number) the
residual for each
observation is
given.
Residual Analysis – Freedom Hospital
The regression
output will also plot
the residuals.