Individual Assignment $2$: Predictive Analysis

$1\mathrm{.}0$ Introduction

An Asian automobile company aspires to enter the US market by setting up their manufacturing unit there and producing cars locally to give competition to their US and European counterparts.

They have contracted an automobile consulting company to understand the factors on which the pricing of cars depends. Specifically, they want to understand the factors affecting the pricing of cars in the American market, since those may be very different from the Asian market. The company wants to know:

$-$ Which variables are significant in predicting the price of a car

$-$ How well those variables describe the price of a car

Based on various market surveys, the consulting firm has gathered a large dataset of different types of cars across the American market.

Business Goal

You are required to model the price of cars with the available independent variables. It will be used by the management to understand how exactly the prices vary with the independent variables. They can accordingly manipulate the design of the cars, the business strategy etc. to meet certain price levels. Further, the model will be a good way for management to understand the pricing dynamics of a new market.

$2\mathrm{.}0$ Dataset

The dataset contains the information of $205$ cars across the American market. Here is the data dictionary which states a short description of each feature as well as the data type.

Data Dictionary

Car$\_$ID: Unique id of each observation $($Integer$)$

Car$\_$Company: Name of car company $($Categorical$)$

Car$\_$body: Body of car $($Categorical$)$

Wheel$\_$base: Wheelbase of car $($Numeric$)$

Car$\_$length: Length of car $($Numeric$)$

Car$\_$width: Width of car $($Numeric$)$

Car$\_$height: Height of car $($Numeric$)$

Car$\_$weight: The weight of a car without occupants or baggage. $($Numeric$)$

Cylinder$\_$number: Cylinder placed in the car $($Categorical$)$

Engine$\_$size: Size of car $($Numeric$)$

Bore$\_$ratio: Bore ratio of car $($Numeric$)$

Horse$\_$power: Horsepower $($Numeric$)$

City$\_$mpg: Mileage in city $($Numeric$)$

Highway$\_$mpg: Mileage on highway $($Numeric$)$

price $($Dependent variable$)$: Price of car $($Numeric$)$

$3\mathrm{.}0$ Required Analysis

Using the descriptive analytics and regression tools, complete the following steps and report on them.

$1.$ Detect and handle missing values $($describe your strategy in the report$).$

$2.$ Fix invalid values: There seems to be some spelling error in the carcompany column:

$($maxda$,$ mazda$)$; $($Nissan$,$ nissan$)$; $($porsche$,$ porcshce$)$; $($toyota$,$ toyouta$)$; $($vokswagen$,$ volkswagen, vw$).$ Fix the misspellings! $($provide the formula$/$part of the results$)$

Hint: You may need to use IF function to automate the misspelling replacement.

$3.$ Using descriptive analytics, complete the following table:

wheelbase carlength curbweight enginesize price

count

mean

standard deviation

min

$25\%$ percentile

$50\%$ percentile

$75\%$ percentile

max

$4.$ Create two new features $($share your approach and part of the results$)$:

a$)$ feuleconomy: defined as $0\mathrm{.}55*$citympg $+0\mathrm{.}45*$highwaympg

b$)$ carsrange: defined according to the following table

price carsrange

$0-15000$ Budget

$15000-25000$ Medium

$>25000$ Highend

$5.$ What is the average engine size for each car range? $($Provide the results in a table$)$

$6.$ Encode the categorical columns: cylindernumber, carbody. Explain the type of encoding you applied for each of them.

$7.$ Exclude the car$\_$ID and carcompany columns, obtain a linear regression model for the rest of dataset where price is the target variable, and the rest of columns are features $($independent variables$).$ Discuss the obtained results in detail.

Important: make sure you apply the regression to the dataset that you modified in previous steps.

$8.$ What is the regression function?

$9.$ The Company wants to predict the price of one their product which has the following specs:

car$\_$body Hatchback

wheel$\_$base $94$

car$\_$length $155\mathrm{.}3$

car$\_$width $64\mathrm{.}2$

car$\_$height $51\mathrm{.}1$

car$\_$weight $2211$

cylinder$\_$number $4$

engine$\_$size $100$

bore$\_$ratio $3\mathrm{.}05$

horse$\_$power $104$

city$\_$mpg $21$

highway$\_$mpg $26$

Price $?$

What would be a reasonable price based on the predictive model you obtained?

$4\mathrm{.}0$ Methodology

$$ Mention the assumptions$/$techniques$/$calculations used to analyze the data $($when necessary$).$

$$ Tabulate the calculations for each question to simplify the understanding of the results.

$$ Provide necessary explanations$/$discussions $($when necessary$).$

$5\mathrm{.}0$ Grading Rubric

Data Cleaning $(20\%)$: Accuracy in data cleaning, including the identification and removal of outliers.

Data processing and descriptive Analysis $(20\%)$

Regression Analysis $(30\%)$: Correct application of regression techniques and interpretation of the results.

Predictive Scenario Analysis $(10\%)$: Precision of the predictive model and the depth of scenario analysis.

Report Quality $(20\%)$: Quality of writing, adherence to APA style, and overall organization and clarity.

N$.$B$.$ Failure to comply with the above would result in low grades.

$6\mathrm{.}0$