The marketing manager of a large supermarket chain would lik

The marketing manager of a large supermarket chain would like to use shelf space to predict the sales of pet food. A random sample of 12 equal-sized stores is selected. The shelf space (X) and sales for the week in dollars (Y) are observed.

a.)Is it necessary to compute the Durbin-Watson statistic in this case? Explain.

b.)Under what circumstances is it necessary to calculate the Durbin-Watson statistic before proceeding with the least-squares method of regression analysis?

a.)Select the correct answer below.

a.) No, because the number of observations is sufficiently small that autocorrelation is not a concern

b.) Yes, because the number of observations is sufficiently small that autocorrelation is a concern

c.) Yes, it is always necessary to compute the Durbin-Watson statisitic.

d.) No, because the data were not collected over time.

b.)Select the correct answer below.

a.) If a single store had been selected and studied over a period of time, it would be necessary to compute the Durbin-Watson statistic.

b.) If a larger number of stores had been selected, it would be necessary to compute the Durbin-Watson statistic.

c.) It is always necessary to compute the Durbin-Watson statistic.

d.) If fewer stores had been selected, it would be necessary to compute the Durbin-Watson statistic.

Solution

Durbin Watson test is used to detect the presence of autocorrelation in a time series.

a. The given data is not a time series, the data is not recorded over different times.

So ,

Answer: C. No, because the data were not collected over time

b. Answer: B. If a single store had been studied over time, it would be necessary to compute the DW statistic.