Orion Electronics, a fictitious chain of electronics stores, operates a website to encourage potential customer to buy its products online. Because the website is expensive to maintain, the VP of Marketing is unsure if the online sales of the company€™s products is directly related to the number of hits on the website. To evaluate this relationship, the marketing manager of the company is directed to gather monthly data on the number of hits and the corresponding sales for the past 24 months. The data are presented in the following table:

Data highlighted in red reflects data in the month when the company€™s website was shut down for the majority of the month as a result of a security breach.

1. What should you do with the data highlighted in red for forecasting purposes? Include it in the model or omit it?

2. Develop a linear regression model using Excel by including all 24 pieces of data.

3. Develop a linear regression model using Excel after excluding the highlighted data in red.

4. Compare the Excel outputs from both €œb and c,€ and determine which linear regression model is a better fit.

Transcribed Image Text:

Customer Orders (in 000s) Number Hits (in 000s) Customer Orders (in 000s) Number Hits (in 000s) 42.3 9.4 48.8 11.3 44.3 29.6 6.1 9.9 12.5 38.4 9.7 57.1 8.3 45.7 54.3 11.9 24.3 5.1 65.9 14.8 55.4 11.7 36.8 6.9 *3.9 0.5 27.4 5.4 30.7 7.3 24.1 4.9 29.2 6.7 40.1 10.8 33.9 7.4 47.8 10.9 28.5 5.5 45.5 11.1 21.6 77 1.9 32.3