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    Random Motors Project Submission: Name - Debasish Pattanaik

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    Debasish Pattanaik
    The document discusses a project for Random Motors. It includes details about testing the specifications of two new car models, Rocinante36 and Marengo32, through hypothesis testing. Regression equations are developed to predict sales of each model based on price, mileage, and top speed. The Rocinante36 model is predicted to be more profitable and thus the CEO will invest in that model. Adjusting the regression models by removing insignificant variables increases the adjusted R-square values.

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    Random Motors Project Submission: Name - Debasish Pattanaik

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    Debasish Pattanaik
    96 views10 pages
    The document discusses a project for Random Motors. It includes details about testing the specifications of two new car models, Rocinante36 and Marengo32, through hypothesis testing. Regression equations are developed to predict sales of each model based on price, mileage, and top speed. The Rocinante36 model is predicted to be more profitable and thus the CEO will invest in that model. Adjusting the regression models by removing insignificant variables increases the adjusted R-square values.

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    IMT Decision Science Project

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    The document discusses a project for Random Motors. It includes details about testing the specifications of two new car models, Rocinante36 and Marengo32, through hypothesis testing. Regression equations are developed to predict sales of each model based on price, mileage, and top speed. The Rocinante36 model is predicted to be more profitable and thus the CEO will invest in that model. Adjusting the regression models by removing insignificant variables increases the adjusted R-square values.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    96 views10 pages

    Random Motors Project Submission: Name - Debasish Pattanaik

    Uploaded by

    Debasish Pattanaik
    The document discusses a project for Random Motors. It includes details about testing the specifications of two new car models, Rocinante36 and Marengo32, through hypothesis testing. Regression equations are developed to predict sales of each model based on price, mileage, and top speed. The Rocinante36 model is predicted to be more profitable and thus the CEO will invest in that model. Adjusting the regression models by removing insignificant variables increases the adjusted R-square values.

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    © All Rights Reserved
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    of 10

    Random Motors Project

    Submission
    Name -

    Debasish Pattanaik
    Q-1a) Formulate the null hypotheses to check whether the new models are
    performing as per the desired design specifications.

    For Rocinante36: For Marengo32:

    Mileage HO : μ = 22km/litre Mileage HO : μ = 15km/litre

    Top speed HO : μ = 140km/hour Top speed HO : μ = 210km/hour


    Q-1b) Formulate the alternate hypotheses to check whether the new models are
    performing as per the desired design specifications.

    For Rocinante36: For Marengo32:

    Mileage H1 : μ ≠ 22km/litre Mileage H1 : μ ≠ 15km/litre

    Top speed H1 : μ ≠ 140km/hour Top speed H1: μ ≠ 210km/hour


    Q-2) In order to comment on whether the design specifications are being
    matched or not, perform relevant hypothesis tests and calculate the p-value for
    each. What will you conclude? Assume you are performing the tests at 95%
    confidence level.
    For Rocinante36: Conclusion

    p-value for mileage = 0.082 P (0.082)>0.05, Fail to reject Mileage HO

    p-value for top speed = 0.431 P (0.431)>0.05, Fail to reject top speed HO

    For Marengo32:
    P (0.134)>0.05, Fail to reject Mileage HO
    p-value for mileage = 0.134
    p-value for top speed = 0.373 P (0.373)>0.05, Fail to reject top speed HO
    Q-3) You have learnt about the possible errors that might result from the
    hypothesis tests. What type of error is more expensive for Random motors
    based on the hypothesis they are testing? Why? Assume that you need to
    refund all your customers if your cars deviate from specifications.
    The type of error which is more Reason:
    expensive:
    If the manufactured cars don’t deliver
    Type 2 error shall be more expensive the results as per the specifications,
    in all the 04 hypothesis tests. the refund cost to the customers shall
    be a huge burden to the company. In
    the worst scenario company, may get
    bankrupt and also may face legal
    action due to false claims.
    Q-4) Develop a regression equation for each model at 95 percent confidence
    level. From the regression equation predict the sales of the two models.
    Develop the regression equation for the Develop the regression equation for the
    Rocinante models and Predict the number Marengo models and Predict the number of
    of unit sales of Rocinante36 model? unit sales of Marengo32 model?

    Regression coefficients Regression coefficients

    Price: 0.004 Price: 0.002

    Mileage: 0.000 Mileage: 0.843

    Top speed: 0.548 Top speed: 0.000

    Equation: Sales=50.723-0.795*Price+8.306*Mileage Equation: Sales=-13.448-0.187*Price+0.221*Top Speed

    Predicted Sales(in units) : 227890 units Predicted Sales(in units) : 25295 units
    Q-5) Based on sales prediction, what is the overall predicted profit for
    Rocinante36 model and Marengo32 model ?

    Overall predicted profit

    Rocinante36 Model : 227890 Lakhs

    Marengo32 Model: 202360 Lakhs


    Q-6) As a CEO, you wish to invest only in the model which is predicted to be
    more profitable. Which model among Rocinante36 and Marengo32 will you
    invest in?

    Which model you will invest in?

    As the CEO of the company, based on the profitability analysis, I’ll invest in
    Rocinante 36 model.
    Q-7) Now you must have derived the regression equation for both models, Rocinante and
    Marengo. Now if you increase the price of Rocinante36 and Marengo32 by 1 lac rupees
    each, which car will have a higher impact on the sales due to increase in price? Give proper
    logic for your answer. You can consider that all other specifications such as mileage and top
    speed remain the same for both models.

    Which car is most affected by a price increase? Why?

    Rocinante 36 car model has a higher impact due to the increase in price.
    The reason behind this is the higher price coefficient.
    Q-8) After developing the regression equation for both models (Rocinante and Marengo), if you
    analyse the p values for coefficients in the regression results, you will notice that some of the
    regression variables (top speed, mileage and price) are insignificant. Remove the insignificant
    regression variables from your selection and rebuild the regression model using only significant
    variables. Compare the Adjusted R square value for the new and old regression model. Do you
    notice any change in Adjusted R square value? If yes, explain the reason for the change.

    Is there a change on Adjusted R square Value? If so, Why?


    Adjusted R square Value
      Rocinante36 Marengo32
    Old 0.99536 0.84788
    New 0.99545 0.85309

    Adjusted R square has increased, the reason behind the change of that, the
    removed variable is insignificant.

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