STEP 3 SELECTING OF
THE DEMAND FUNCTION AFTER SETTING THE VARIABLES AND THE COLLECTION OF PAST
DATA, THE NEXT STEP BEFORE FINALLY COMPILING EVERYTHING IS TO DETERMINE THE
COMPLETE DEMAND FUNCTION. WHICH IS THE DEPENDENT OR THE VARIABLE THAT IS TO BE
PREDICTED. THE FACTORS THAT EFFECT THIS ARE THE VARIABLES THAT WERE DEFINED IN
THE FIRST STEP. THE DEMAND FUNCTION CAN BE OF LINEAR OR IN LOGARITHMIC FORM, BOTH
OF THEM ARE DISCUSSED INDIVIDUALLY BELLOW.
LINEAR INVOLVES FINDING THE LINE OF
BEST FITS BETWEEN TWO OR MORE VARIABLES, THUS BY INPUTTING ONE OR MULTIPLE
VARIABLES OTHER VARIABLE. THESE COEFFICIENTS ARE RESPONSIBLE FOR THE AMOUNT OF
CHANGES AS WELL AS THE NATURE OF THE CHANGE (POSITIVE OR NEGATIVE) FOR EXAMPLE
IN THE ABOVE EQUATION EFFECT OF INCOME, ADVERTISEMENT AND SUBSTITUTE WILL HAVE
A POSITIVE BETWEEN THE OVEN TEMPERATURE AND SHELF LIFE OF COOKIES BAKED IN
THOSE OVENS OR A COMPANY OPERATING A CALL CENTER MAY WISH TO KNOW THE
RELATIONSHIP BETWEEN THE WAIT TIMES OF CALLERS AND THE NUMBER OF COMPLAINS THAT
THE STRENGTH CAN BE PREDICTED AND ANALYZED USING DIFFERENT FACTORS, WHEREAS IN
BIOLOGICAL SCIENCE MEASURING THE BODY MASS AND COX ENZYME ACTIVITY IN A SIMPLE
OF FEW DIFFERENT SPECIES OF SMALL MAMMAL ARE ALL DONE USING EXACT SAME METHOD.
BY USING REGRESSION ANALYSIS IN VAST NUMBER OF DISCIPLINES IT BECOME EASIER TO
PREDICT AND ESTIMATE THE BEHAVIOR OF THE STRUCTURE OR FORECAST THE DEMANDS OF A
PRODUCT, THIS METHOD HELPS GENERATE ACCURATE RESULTS AND ANALYZE THE FACTORS
EFFECTING IT DIRECTLY OR INDIRECTLY BY SUMMARIZING LARGE NUMBER OF DATA AND
CALCULATING THE RESULTS, WHICH FOR IN SOME CASES ARE OF HIGH IMPORTANCE AND CAN
CHANGE THE OUTCOME OF THE ORGANIZATIONS.
CONCLUSION AND SUMMARY IN THIS ARTICLE
WE HAVE DISCUSSED ABOUT REGRESSION ANALYSIS AND SEEN HOW IT IS USED TO EXAMINE
THE RELATIONSHIP BETWEEN TWO OR MORE VARIABLE, THE DEPENDENT (PREDICTOR) AND
THE INDEPENDENT (RESPONSE) VARIABLE, AND THEN STUDIED WHY THIS METHOD IS WIDELY
USED FOR PREDICTING OR ESTIMATING THE OUTCOMES IN VARIOUS FIELDS. PLUS, WE HAVE
ALSO WENT THROUGH STEP BY STEP METHOD FAR CONSIDERED THE BEST TECHNIQUE FOR
PREDICTING THE OUTCOME OF VARIOUS MODELS AND IS TODAYS MANAGERS BELIEVES IT TO
BE AN INDISPENSABLE TOOL.
REFERENCES
HHTTP://WWW.PURCHASESMARTER.COM/ARTICLES/119 HTTP://LEARNECONBIOLOGY.QUEENSU.CA/ACADEMICS/UNDERGRADUATE/RESOURCES-FOR-COURSES/ANALYZING-DATA/CORRELATION-AND-REGRESSION/
ZDA=(PZ,Y,A, PZ,PC) WHERE, ZDA = DEMAND FOR COMMODITY A PRICE OF COMMODITY A
(PZ) CONSUMER INCOME (Y) ADVERTISING EXPENDITURE INCURRED ON COMMODITY Z (A)
PRICES OF SUBSTITUTE (PS) PRICES OF COMPLEMENT (PC) NOTE THAT THESE VARIABLES
CAN HAVE BOTH POSITIVE AND NEGATIVE EFFECTS ON THE DEMAND THAT IS THAT ARE TO
BE SELECTED SHOULD HAVE A SIGNIFICANT IMPORTANCE ON THE DEMAND THAT COMMODITY
AND WHEREAS THE USE OF TOO MANY VARIABLES AND UNIMPORTANT FACTORS SHOULD BE
OVERLOOKED, BELOW IS AN EXAMPLE OF WHAT’S STATED ABOVE WHEN A CERTAIN BRAND OF
CLOTHING IS PREDICTING THEN FACTORS SUCH AS CREDIT ACCOUNTS AND INTEREST PLAY A
VITAL ROLE. ADDING EXTRA VARIABLES THAT HAS NEGLIGIBLE AFFECT OR NO EFFECTS
WILL MAKE YOUR ANALYSIS COMPLICATED AND TOO MUCH WORK SO IT’S KEPT SIMPLE.
STEP
2 PAST DATA COLLECTIONS ONCE YOU HAVE YOUR VARIABLES SET AND DETERMINED THE
NEXT IMPORTANT STEP IN THE PROCESS IS THE COLLECTION OF THE PAS DATA. THE DATA
THAT SHOULD BE GATHERED MUST BE WITH RESPECT TO THE VARIABLES THAT YOU HAVE
DETERMINED OR SET. THE DATA COLLECTION CAN BE DONE IN TWO DIFFERENT UNIQUE WAYS
DESCRIBED BELOW FIRSTLY, IT CAN BE COLLECTED WITH RESPECT TO THE POPULATION IN
TERMS OF INCOME, PRICES, ETC. FOR VARIOUS TIME PERIODS. ALSO IN CAN BE
COLLECTED WITH RESPECT TO INCOME AND PRICES FOR THE DIFFERENT REGIONS OF THE
MARKET FOR A PARTICULAR TIME PERIOD.
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