Answer to Question #193818 in Management for Ishita

Question

Nemi Mehta is owning 50 Hectares of land near Junagadh. On his Farm, he cultivates Giloy, which is a medicinal plant in Ayurveda. The below-given table shows the sales of ‘Giloy Vati’ that his team is preparing as per one Ayurveda script (book), and the amount they spend on the Advertisement of it. Nemi’s problem is to analyze the effect of Advertisement on sales. Firstly, He wants to understand the presence of a linear relationship between the sales and ‘amount spent in advertisement’. He also wants to run a correlation and regression to know whether he should keep spending money on Advertisements or not. If sales figures are not affected by advertisement, he should not spend money on it. So, take the EXCEL output of the following and write the interpretation.  Appropriate type of Graph which can exhibit the linear relation b/w variables.  Karl Pearson’s Correlation Coefficient  Regression Analysis  Graph that shows predicted v/s actual sales figures.

Answer 1

Linear Regression

Linear Regression Graph

There is a linear relationship between both variables.

Karl Pearson’s Correlation Coefficient

As shown above, there is a significant correlation between sales and advertising. The p-value is less than 0 suggesting that there is a strong relationship between both variables.