Module 3 Homework: Discriminant Analysis
Due 2/4/2023
A car dealership is interested in assessing which variables can increase car sales. For this purpose,
the company conducted a research with potential customers visiting the showroom. Later, the
company split the sample in two groups, one that effectively bought the car and another that did
not. Both groups replied to a survey about their satisfaction with the dealership. The questions
measured the customers’ satisfaction with various aspects, ranging from (1) not satisfied at all till
(7) very satisfied. The results of a discriminant analysis are:
Figure 1
Figure 2
Figure 3
Figure 4
Figure 5
Figure 6
1. Is the estimated function relevant in explaining whether customers purchase a car or not?
What is its explanatory power?
2. Classify in descending order the five most important variables for explaining the customer’s
decision to buy a car.
3. Is the function effective in classifying cases into the two groups? How many cases were
misclassified?
4. Based on descriptive statistics, which variable is most influential in preventing the customer
from purchasing a car?
Part II.
Run the Business_Status file above using the steps below:
1. Is the estimated function relevant in explaining whether a business is bankrupt,
remain steady state, or expanding? What is its explanatory power?
2. Classify in descending order the five most important variables for explaining the
business’s status.
3. Is the function effective in classifying cases into the three groups?
How many cases were misclassified? What % of bankruptcy is correctly classified?
4. Based on descriptive statistics, which variable is most influential in leading to
company’s rapid expansion?
