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A step-by-step guide on how to create a scatter diagram and obtain regression output for simple linear regression using excel 2007. The tutorial covers entering data, making a scatter diagram, adding a regression line, and using the data analysis tools to obtain regression output. The example uses a dataset that looks at the relationship between sales and the number of ads placed.
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Entering Data The data used for this example that looks at the relationship between sales and the number of ads placed. This tutorial will use the data set to construct a scatter diagram and to obtain regression output for simple linear regression. The first step is to enter the data. In general, this can be done by typing in the values or by opening the file on the disk that came with the book. Recall that these files are also on the R drive on the NGCSU campus and in the Shared Class Files (in the BUSA 3110 folder inside the NGCSU folder) on the GSC campus. Typing variable names in the first row makes it easier to keep track of what is entered. This is not required…just a convenience. Since we will be setting up a scatter diagram, it is easier if we put the data in so that the X variable (the variable that will be on the horizontal axis) is in the first column and the Y variable (the variable that will be on the vertical axis) is in the next column. In this problem we are attempting to estimate sales based on the amount spent on advertising. Therefore, Sales is Y and Advertising is X. Once the data are entered your screen should look like the following. To make a scatter diagram, highlight the data (no need to highlight the column headings) and click on the Insert tab.
Then select the Scatter choice for the chart. From the drop down menu, select the version with dots and no lines connecting the dots. You will have the first glimpse of a scatter diagram, but this will need some cleanup and some additions. Click on the graph and select Layout tab (see below). Use the Legend dropdown menu to get rid of the legend; use the Axes dropdown menu to put labels on the axes; use the gridlines dropdown menu to get rid of the horizontal gridlines; and use the Chart title dropdown menu to add a title to the chart.
The following dialogue box appears. In the white space next to “Input Y Range” you need to identify the numbers that correspond to Y values—do this by dragging over the values and the heading on your spreadsheet. In the white space next to “Input X Range” you need to identify the numbers that correspond to the X values—do this by dragging over the values and the heading on your spreadsheet. Selecting the headings for the columns makes reading the output easier. Since you selected these, click on the box next to Labels. We will not force the intercept to be 0 and we will not use the Confidence Level part of the output, so leave these blank. In order to put your output on the same page as the rest of your work, check the box next to “Output Range” and click in the white box to the right of this. Then select the upper left cell for the output by clicking on that cell on the spreadsheet—this example uses A19. In order to obtain some of the output we will look at later, check next to “Residuals.” Your output should look like the following:
Note: We will spend several days addressing what is included in this output!