Gary decides that the simple regression analysis used in Part A above could be extended to a multiple regression analysis.

Required:

(i) Using Microsoft Excel Data Analysis ToolPak, present summary results for the following regression models:

a. Regression 4: PDC = a + (b1 x No. of POs) + (b2 x No. of Ss)

b. Regression 5: PDC = a + (b1 x No. of POs) + (b2 x No. of Ss) + (b3 x DVMP)

(ii) Evaluate Regression 4 using the criteria as described in your text. Compare Regression 4 with Regressions 2 and 3 in Part A above. Which of these models would you recommend that Gary use? Explain why.

(iii) Compare Regression 5 with Regression 4. Which of these models would you recommend that Gary use and why?

(iv) Gary estimates the following data for Store Location 1 next year:

dollar value of merchandise purchased = $77,000,000

number of purchase orders = 4,200

number of suppliers = 120

Estimate how much Gary should budget for purchasing department costs for Store Location 1 next year.

(v) Briefly explain, in less than 5 sentences, what difficulties arise in multiple regression analysis that do not arise in simple regression analysis.