Developing and Using a Simple Regression Equation. The simple regression model is based on the equation for a straight line: Yc = A BX

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Developing and Using a Simple Regression
Equation.The simple regression model is based
on the equation for a straight lineYc ABX
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Yc ABXwhereYc the calculated or
estimated value for the dependent variableA
the Y interceptB the slope of the lineX
independent variable
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Graphical depiction of a regression line
Y
Yc A BX
slope
intercept
X
0
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How can we estimate next years yield?
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How can we estimate next years yield?
Take the average?
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What might trend represent?
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What might trend represent?Technology
innovation hybrid development
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We want to find the line of best fit.An average
just wont cut it.
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Graphical depiction of a regression line
Y






X
0
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Step 1 Collect the historical data.Every Y
observation must have an X.
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Step 2 Put the data in a tabular form.
X
Y
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Step 3Calculate the Means of X and Y
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X ? X ----- n Y ? Y
----- n
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Step 4. Compute the slope (B) and Y intercept (A)
B ? XY n X Y ------------------
? X2 n X2
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A Y - BX
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B 1823124 (71997130.414)___________________
___27916091 (719971997)B (67/28) 2.3929
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A 130.414 (2.3929 1997)A 130.414
4778.62A - 4648.20
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Y 2001 -4648.20 (2.39292001)Y2001 139.99
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