Identify two important operating standards that are routinely measured in your organization. These measures must be “paired observations” and must also meet the criteria for a quantitative measure (i.e. either interval or ratio level of measurement). Obtain 20 paired observations. Purpose: To demonstrate the application of Correlation and Regression analysis in your organization. Example: Standard measures that fit these requirements might be total electricity demand measured in kilowatts (ratio level), and outside temperature measured in degrees Fahrenheit (interval level). The hotter outside temperature the higher the electricity demands will be. 1) Identify which of the two variables is the logical choice for the dependent variable (Y), and which is the independent variable (X). In the example above the electricity demand is a logical choice for the dependent variable (Y), and outside temperature is a logical choice for independent variable (X). 2) Using the same variables, perform a simple regression on EXCEL, and determine the regression equation. 3) Identify the Correlation coefficient, and coefficient of determination from the Excel output. 4) Interpret your correlation and regression coefficients. Is simple regression a good prediction model for the example you have provided?
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