DISS-700 Homework #7

Ezana D. Aimero

An assignment submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy In Information Systems

Graduate School of Computer and Information Sciences Nova Southeastern University DISS-700 Research Methodology April 2012 Instructor: Prof. Ling Wang

Exercise 12.10 (p.366) Below are Tables 12A to 12D, summarizing the results of data analyses of research conducted in a sales organization that operates in 50 different cities of the country, and employs a total sales force of about 500. The number of salespersons sampled for the study was 150. a. Interpret the information contained in each of the tables in as much detail as possible b. Summarize the results for the CEO of the company c. Make recommendations based on your interpretation of the results

TABLE 12 A Variable Sales (in 1000s of $) No. of salespersons Population (in 100,000s)

Means, standard deviations, minimum, and maximum. Mean 75.1 25 5.1 20.3 10.3 Std. deviation 8.6 6 0.8 20.1 5.2 Minimum 45.2 5 2.78 10.1 6.1 Maximum 97.3 50 7.12 75.9 15.7

Per capita income (in 1000s of $) Advertisement (in 1000s of $)

Table 12A provides data about the sales of the company. In reviewing the data provided by the company, the independent and dependent variables will need to be labeled. The dependent variable (DV) is the company sales. The independent variables (IVs) are number of salespersons, population, per capita income, and advertising. While the sampling method was not disclose d, it appears that the sample size of 150 may be too small. According to Roscoe (1975), as a rule of thumb, with a population of 500, the sample size should be over 260. In analyzing the statistics provided for the DV sales, the range in company sales was from
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97.3 to 45.2 which represent a wide spread. The mean of company sales was 75.1 which appear reasonable in these circumstances when considering that the mean of the minimum and maximum is 71.25 and the standard deviation (SD) is 8.6. Sekaran and Bougie (2009) stated that the standard deviation offers an index of the spread of a distribution or the variability in the data and it is used as measure of dispersion and is the square root of the variance. The mean and standard deviation are the most descriptive statistics for interval and ratio scaled data. The SD, in conjunction with the mean, is a very useful tool because of the following statistical rules, in a normal distribution (Sekaran & Bougie, 2009): 1. Practically all observations fall within three standard deviations of the average or the mean. 2. More than 90% ofthe observations are within two standard deviations of the mean. 3. More than half of the observations are within one standard deviations of the mean. This would to the believe that there is a normal distribution and therefore each city (the unit of analysis) is producing sales of between $66.5 and $83.7 thousand based on the standard deviation of 8.6. As for the IVs, population appears to be normally distributed with a mean of 5.1 hundred thousand individuals and a SD of 0.8. The IV of number of salespersons could also be a normal distribution. Even though there is a high range the mean of the minimum and maximum come close to the overall mean. The SD is also close to the mean. However, the IVs of per capita income and advertising are skewed. Per capita income has a very high range and the SD is not close at all to the mean. In other words, there is a tremendous variance in the wealth of the cities that must be taken into consideration in the proportion of sales by city. As for advertising, while the range would appear reasonable, the SD varies a great deal indicating that this is a disproportionate relationship. In summar y, the data contained in Table 12A indicates the following: sales could be
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affected by the placement of salespersons in cities, the company should focus on cities with high per capit a income, and the company should invest advertising funding into those cities with the least sales. These changes will be beneficial to the company.

TABLE 12 B Sales Sales No. of salespersons Population Income Ad. Expenditure 1.0 0.76 0.62 0.56 0.68

Correlations among the variables. Salespersons Population Income Advertisement

1.0 0.06 0.21 0.16 1.0 0.11 0.36 1.0 0.23 1.0

All figures above 0.15 are significant at p = 0.05 All figures above 0.35 are significant atp::; 0.001 Table 12B contains the data of the correlation between the different variables in the study. The correlation is derived by assessing the variations in one variable as another variable also vari es (Sekaran & Bougie, 2009). Simply put, correlation measures the strength of the linear relationship between the variables. The stronger the correlation the better the independent variable predicts the dependent variable. Correlation values range from -1.0 to +1.0 indicating perfect positive correlation at the +1.0 level to perfect negative correlation at -1.0, with zero indicating no correlation (Investopedia, 2011). As we know, a significance ofp=0.05 is the generally accepted conventional level of social research (Sekaran & Bougie, 2009). This indicates that 95 times out of 100, we can be sure that there is a true or significant correlation between the two variables, and there is only 5% chance that the relationship does not exist (Sekaran & Bougie, 2009). In Table 12B, we know that all figures above 0.15 have a 95% confidence that the correlation between the variables exists. Also, we know that all figures above 0.35 have a 99.9%
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confidence that the correlation between the variables exists. The independent variables are number of salespersons, population, per capita income and advertising dollars. The dependent variable is amount of sales. As expected, there is a strongly significant relationship between number of salespersons and amount of sales. The correlation between number of salespersons and amount of sales is significant at .76 out of 1.00 with a confidence interval of99.9%. This relationship suggests that as the number of salespersons increas e, so does the amount of sales increase which indicated a strong correlation between the variables. There is a medium correlation between population and amount of sales that is significant at .62 out of 1.00, suggesting that sales are better with a somewhat larger population as potential customers. The relationship between population and amount of sales is also based on a confidence interval of99.9%. There is no significant relationship between population and

number of salespersons based on a correlation of .06 out of 1.00. The relationship between per capita income and amount of sales is moderately significant at .56 out of 1.00 with a confidence interval of 99.9%. The correlation is low but still significant between per capita income and number of salespersons at .21 out of 1.00 with a 95% confidence interval. There is no significant relationship between per capita income and population at .11 out of 1.00. The correlations for advertising dollars and other variables are mixed. There is a somewhat strong and significant relationship between advertising dollars and amount of sales at . 68 out of 1.00 with a 99.9% confidence interval. This is not surprising and suggests that advertising is a definite contributor to sales. We can say with 95% confidenc e, that there is a slightly significant relationship between advertising dollars and number of salespersons (.16 out of 1.00). There is a mild but significant correlation between advertising dollars and population at
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.36 out of 1.00 with a confidence interval of 95%. The statistics also reveal a low but significant correlation between advertising dollars and per capital income at .23 out of 1.00 with a 95% confidence interval.

TABLE 12 C Source of variation Between groups Within groups Total

Results of one-way ANOVA: sales by level of education. Sums of squares 50.7 501.8 552.5 Degree of Freedom 4 145 150 Mean squares 12.7 3.5 F 3.6 Significant of F 0.01

Table 12C provided the results by using a one-way ANOVA test to study sales by level of education. We would like to point out that table 12C needs to be updated to resolve a

calculatio n error on the total degrees of freedom which should be 149 not 150. The ANOVA examines significant mean differenc es among more than two groups on an interval DV. The DV in this study was sales and the IV was level of education. The ANOVA formula (which is a ratio) compares the amount of variability between groups (which is due to the grouping factor) to the amount of varia bili ty within groups (which is due to chance). In other word s, the within group difference is equal to the amount of variability due to between group differences and any difference between groups will not be significant. The F ratio is the ratio of variability between groups to variability within groups. To determine the values it is necessary to compute the sum of squares for each source of variability between groups, within groups, and the total. The between groups sum of squares equals the sum of differences between the mean of all scores and the mean of each groups scor e, which is then squared. The within group sum of squares is equal to the sum of differences between each individual score in a group and the mean of each group, which is then squared. The total sum of squares is equal to the sum of the between group and the 6

within group sum of squares (Mertler & Vannatt a, 2005 ). Since there are four degrees of freedom (df) between groups, the number of groups would be five as follows: 4dfs= [5 groups (or levels of education) -1] x [3 categories of interest -1]. The F statistic can be thought of as a measure of how different the means are relative to the variability within each sample (Levin & Stephan, 2004). Computi ng the F statistic requires

dividing each sum of squares by the degrees of freedom (which are in approximation to the sample or group size), and then dividing the resulting mean sum of squares due to between group differences by the mean sum of squares due to within group differences (Salkin d, 2011). The F statistic for table 12C was obtained by the dividing the between group of 12.7 by the within group of 3.5 which provided the result of 3.6. The obtained value or F statistic of 3.6 is then compared to the critical value (CV) which is the value needed for rejection of the null hypothesis. The CV in this case is 3.32 as determined from the appropriate table. We may therefore conclude that the null hypothesis may be rejected and that sales are indeed affected by level of education. We can say this with 99% confidence since the significance of F is listed as .01.

TABLE 12 D

Results of regression analysis. Model Summary Value 1 Multiple R 0.65924 R square 0.43459 Adjusted R square 0.35225 Standard error 0.41173 df (5.144) F 5.278 Sig 0.000 Variable Beta Training of salespersons 0.28 No. of Salespersons 0.34 Population 0.09 Per capita income 0.12 Advertisement 0.47

Value 2

Value 3

t 2.768 3.55 0.97 1.200 4.54

Sig. t 0.0092 0.00001 0.467 0.089 0.00001

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Table 12D is the results of a regression analysis. The IVs of salespersons, population, per capita income, and advertising were all significant to different degrees. When interpreting the regression analysis, the multiple correlation or R of .65924 indicates that the combination of IVs predicts the DV of sales and shows a good fit between the predicted and actual scores of the DV. The squared multiple correlation (R squared) of .43459 tells us that the percentage of variance of over 43% gives us a degree of "goodnes s of fit" that indicates that it is likely that there are more IVs that could contribute to the research study. The adjusted squared multiple correlation (R squared adjusted) of .35225 indicates that there was an overestimate of the Rand R squared populat ion. There is evidence of bias possibly caused by the small sample size. The ANOVA generated an F test of 5.278 assuming a level of significance of 0.0. This is much lower than would be expected in a linear relationship. The results should be in the range of20.5 to 22.5. For each ind ividual IV, in order to see if that IV is significantly affecting the DV in the regression model, the Beta test was run and a t value generated. In running the Beta test, each IV had a positive value, indicating that there is a positive change in the DV when the IV increases. There are, however, different degrees of change among the IVs. For instance, population and per capita income have low Beta test results. The t and p values are used to indicate the significance of the beta weights applied. The results of the t tests showed that for a sample size of 150 and a t score threshold of2.768, the IVs of training of salespersons (t value of2.768 ), number of salespersons (t value of3.55), and advertisement (t value of 4.54) were above the t value threshold required to be compliant with the probability of error which is approximately p < .01 and therefore showing no significant difference from the 0. On the other hand, the t value results for population of .97 and per capita income of 1.2 were below the threshold for error. It should
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be noted that even though the significant t value for population was higher at .467, the t value remained below the required threshold and this difference was therefore significant.

Executive Summary
The consulting team collected sales data across 50 cities and sampled 150 salespersons from the 500 member sales force. Sales was measured in 1O O O s dollars, populations was of

measured in 1O O ,O O O s people, per capita income was measured in 1O O O s dollars, advertising of of was measured in 1O O O s dollars. Education level and training of salespersons was also of evaluat ed. The overall results indicate that number of salespersons, education levels of salespersons , training of salespersons, and advertising dollars are the biggest contributors to amount of sales. The evidence for this is demonstrated across three different statistical tests: correlation, analysis of variance, and regression analysis. Not surprisingly, correlation tests indicate there is some evidence that a larger population provides more potential for larger sales but income does not appear to play a major part based on the current analysis.

Recommendations
The research team recommends that the company invest in number of salespersons and training of salespersons and also review and increase advertising dollars in those areas that are lacking. I t is also recommended that further analysis is done regarding education levels of salespersons to better understand the educational threshold. Finally, it would be useful to create additional regression models to find a better fit model and increase understanding of the factors that best contribute and in what proportion to positively affect amount of sales.

References

Neil J. Salkind. Exploring Research. (8th edition, 2011). Upper Saddle River, N.J., U.S.A.: Prentice Hall. Uma Sekaran & Roger Bougie. Research Methods for Business: A Skill Building Approach. (5th edition, 2010). West Sussex, U.K.: John Wiley & Sons.
Investopedia. (2011). Retrieved from http://www.investopedia.com Levin, D., & Stephan, D. (2004). Even You Can Learn Statistics: A Guide for Everyone Who Has Ever Been Afraid of Statistics. Upper Saddle River, NJ: Pearson Prentice Hall. Mertler, C. A., & Vannatta, R. A. (2005). Advanced Multivariate Statistical Methods: Practical Application and Interpretation. Glendale, CA: Pyrczak Publishing.

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