Problem 1 (17 total points)

Weekly sales data for 3 different geographically located stores belonging to a retail chain was collected across the years 2010 to 2012, along with average temperatures of the week.

The retail chain runs several promotional markdown events throughout the year. These markdowns are held during prominent holidays, the three biggest being Labor Day, Thanksgiving, and Christmas. You are interested in how the "holiday effect" impacts the retail chain's weekly sales.

The file problem1.xlsx contains historical weekly sales data of these 3 stores. The data file has information on the following variables.

Variables Description

Store Store number (1, 2 or 3)

Date The date (week)

Weekly_sales ($) Sales for the given store in the given week

Temp (0F) Average temperature in the area where the particular store is located

IsHoliday Whether the week is a special holiday week (TRUE - yes, it is a special holiday week, FALSE - no, it is not)

(a) (3 points) Run a regression using:

"Weekly_sales" as dependent variable.

"Store", "Temp", and "IsHoliday" as independent variables.

Report and interpret the R-square measure (please round the R-square to four decimal digits)

(b) (3 points) Report the estimated intercept and interpret it.

(c) (3 points) Report the coefficients relating to the stores and interpret each coefficient.

(d) (4 points) Is there a 'holiday effect' on sales at these three stores? Briefly explain your answer.

(e) (4 points) What is the estimate of difference in sales between Store 2 and Store 3, given that the week is a special holiday week and that the temperature in the areas where the stores are located is 60 Fahrenheit.