7.2.2 MLR - Application Recap

Overview

• Objective: Recapitulation of the application of multiple linear regression (MLR) using Hanumantha's dataset.
• Context: This session reviews the outcomes of applying MLR to predict monthly spending based on annual income and household size.

Residual Analysis

• Standardized Residuals:
• Most residuals fall within \(\pm 2\) standard deviations, suggesting normally distributed errors.
• Residual Plots:
• No problematic patterns such as funnels or curvilinear shapes were observed, indicating no violations of homoscedasticity or independence assumptions.

Conclusion

• Implications for Business Decisions:
• The MLR model provides a robust framework for predicting monthly spending based on multiple economic factors, significantly improving upon simpler models.
• Next Steps:
• The course will proceed to revisit examples from simple linear regression for comparison, enhancing understanding of the benefits of MLR.

Discussion

• Interactive Elements:
• The recap included active discussions with participants, such as Tejas and Ashwini, to contextualize the theoretical outcomes within practical business applications, enriching the learning experience.