Basic Business Statistics, Student Value Edition

14th Edition

ISBN: 9780134685113

Author: Mark L. Berenson, David M. Levine, David F. Stephan, Kathryn Szabat

Publisher: PEARSON

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Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.

Linear Correlation

A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.

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Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as p…

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Textbook Question

Chapter 14, Problem 59PS

A marketing manager wants to predict customer with the risk of churning (switching their service contracts to another company) based on the number of calls the customer makes to the company call center and the number of visits the customer makes to the local service center. Data from a random sample of 30 customers, organized and stored in Churn show that 15 have churned (codes as 1) and 15 have not (codes as 0)

a. Develop a logistic regression model to predict the probability to churn, based on the number of calls the customer makes to the company call center and the number of visits the customer makes to the local service center.

b. Explain the meaning of the regression coefficients in the model in (a).

c. Predict the probability of churn for a customer who called the company call center 10 times and visited the local service center once.

d. At the 0.05 level of significance, is there evidence that a logistic regression model that uses the number of cells the customer makes to the company call center and the number of visits the customer makes to the local service center is a good fitting model?

e. At the 0.05 level of significance, is there evidence that the number of calls the customer makes to the company call center and the number of visits the customer makes to the local service center each make a significance contribution to the logistic model?

f. Develop a logistic regression model that includes only the number of calls the customer makes to the company call center to predict the probability of churn.

g. Develop a logistic regression model that includes only the number of visits the customer makes to the local service center to the predict churn.

h. Compare the model in (a), (f) and (g). Evaluate the differences among the models.

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Chapter 14, Problem 58PS

Chapter 14, Problem 60PS

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Chapter 14 Solutions

Basic Business Statistics, Student Value Edition

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Solution Summary: The author analyzes the logistic regression model to predict the probability of churn based on the number of calls and visits to local service center.

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