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QUESTION

Tayko software is a software catalog firm that sells games and educational software. It recently revised its collection of items in a new catalog,...

SPENDING (response)

Amount spent by customer in test mailing (in dollars)

Use SAS for the analysis. Copy and paste the output nicely.

•     Partition the 1000 records into training and validation datasets. The first 800 observations are to be used for model estimation/training.

•     Run a multiple linear regression model (refer to this as MODEL 1) of SPENDING vs. LAST_UPDATE, WEB, GENDER, ADDRESS_RES and ADDRESS_RES. Interpret the results.

•     Add FREQ to the MODEL 1 of spending (refer to this as MODEL 2). Interpret the results.

•     Which model is better? Why?

•     Evaluate the predictive accuracy of the two models by examining the performance on the validation dataset. Hint: Use RMSE.

•     Based on the best model, what type of customer is most likely to generate more revenue?

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