Case Study

Due Date: 12/11

Please use one Excel file to complete this case study, and use one spreadsheet for one problem. Finally, upload the Excel file to the submission link for grading.No credit will be granted for problems that are not completed using Excel.

Wal-Mart is the second largest retailer in the world. The data file (WalMart_revenue.xlsx) is included in the Excel data zip file in week one, and it holds monthly data on Wal-Mart’s revenue, along with several possibly related economic variables.

(a) Develop a multiple linear regression model to predict Wal-Mart revenue, using CPI, Personal Consumption, and Retail Sales Index as the independent variables.

(b) Find the residuals and the predicted values for the multiple regression model, and then plot the residuals against the predicted values by Excel’s scatter chart (Insert tab > Charts > Scatter chart). Comment on what you see on the plot.

(c) Does it seem that Wal-Mart’s revenue is closely related to the general state of the economy?

Identify and remove the four cases corresponding to December revenue.

(d) Develop a multiple linear regression model to predict Wal-Mart revenue, using CPI, Personal Consumption, and Retail Sales Index as the independent variables.

(e) Find the residuals and the predicted values for the multiple regression model, and then plot the residuals against the predicted values by Excel’s scatter chart (Insert tab > Charts > Scatter chart). Comment on what you see on the plot.

(f) Does it seem that Wal-Mart’s revenue is closely related to the general state of the economy?

(g) Compare the results of parts (a) and (d), which of these two models is better? Use R-square values, adjusted R-square values, Significance F values, and p-values to explain your answer.