Question

A company wishes to predict employee performance (y) based on four variables - length of time in the industry (x1), mechanical aptitude test score (x2), prior on-the-job performance rating (x3), and age (x4). The following equation has been developed:

Answer 1

The regression equation predicts employee performance based on industry experience, test score, prior performance rating, and age. For a specific candidate, the estimated performance is approximately 208.498 units.

(a) The equation provided is called a regression equation or a regression model.

(b) The equation has one dependent variable (Y) and four independent variables (X1, X2, X3, X4).

(c) The number 0.912 is called the coefficient or regression coefficient for the variable X3 (prior on-the-job performance rating).

(d) As age (X4) increases by one year, the estimated performance (Y) increases by 0.007 units, holding other variables constant.

(e) To estimate the potential employee's performance, substitute the given values into the regression equation:

Y = 11.3 + (0.7 * X1) + (0.486 * X2) + (0.912 * X3) + (0.007 * X4)

Y = 11.3 + (0.7 * 8) + (0.486 * 225) + (0.912 * 90) + (0.007 * 24)

Y = 11.3 + 5.6 + 109.35 + 82.08 + 0.168

Y is approximately 208.498

Therefore, the estimated potential employee's performance is approximately 208.498 units.