Question

A sporting goods store manager wants to forecast annual sneaker revenues based on the type of sport (running, tennis, or walking), color (red, blue, white, black, or violet) and its target audience (men or women). How many independent variables should the manager include in her multiple regression analysis? Please enter your answer as an integer; that is with no decimal point.

Answer 1

Answer: The manager should include 7 independent variables in her multiple regression analysis .

Explanation:

Given : The manager wants to forecast annual sales revenues of snekers of different categories.

The given categories are :-

Sports , color , gender.

Also when we have a categorical variable that assumes n different divisions then the number of dummy explanatory variable for multiple regression will be n-1.

Number of types of sports = 3

⇒ Number of dummy variables for types of sports = 3-1 =2

Number of types of color = 5

⇒ Number of dummy variables for types of color = 5-1 =4

Number of types of gender = 2

⇒ Number of dummy variables for gender = 2-1 =1

Now, the total number of independent variables = $4+2+1=7$

Hence, the manager should include 7 independent variables in her multiple regression analysis .