Statement of a problem № m40695


Analyze the stepwise regression model. Write a report to the marketing manager pointing out the strengths and weaknesses of the model. Be sure to comment on the department’s goal of being able to use the model to predict which customers will purchase high volumes from McCracken. The J. J. McCracken Company has authorized its marketing research department to make a study of customers who have been issued a McCracken charge card. The marketing research department hopes to identify the significant variables that explain the variation in purchases. Once these variables are determined, the department intends to try to attract new customers who would be predicted to make a high volume of purchases. Twenty-five customers were selected at random, and values for the following variables were recorded in the file called McCracken: y = Average monthly purchases 1 in dollars 2 at McCracken x1 = Customer age x2 = Customer family income x3 = Family size

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