Unit 6: Business Decision Making - Information in appropriate formats
Scatter (XY) graphs and linear trend lines
Extrapolation for forecasting — reliability
Scattergraphs
A scattergraph is a plot of two sets of data.
Interpolation can be used to make an assumption about intermediate values.
Graphs can be extended to predict future changes in the data.
The Straight Line
By drawing a straight line, we can express the line
as a relationship
y = a + bx
Regression Line
By drawing a straight line, we can plot a line of best fit.
Regression by Formula
By using a mathematical method called the "Method of Least Squares" it is possible to find the values of a and b for y = a + bx in order to find a regression line.
The Regression Formula
Limitations of Regression
An assumption is made with the regression line that it is where it should be.
You can not assume that the regression line is valid outside the range of the data.
You can interpolate, but you can not extrapolate.