Graded Case Study Topic: Chapter 14 (Regression)

Case Study: Severance Pay

When one company buys another company, it is not unusual that some workers are

terminated. The severance benefits offered to the laid-off workers are often the subject of

dispute. Suppose that the Laurier Company recently bought the Western Company and

subsequently terminated 20 of Western’s employees. As part of the buyout agreement, it

was promised that the severance package offered to the former Western employees would

be equivalent to those offered to Laurier employees who had been terminated in the past

year. Thirty-six-year-old Bill Smith, a Western employee for the past 10 years, was one

of those let go. His severance package included an offer of 5 weeks’ severance pay. Bill

complained that this offer was less than that offered to Laurier’s employees when they

were laid off, in contravention of the buyout agreement. A statistician was called in to

settle the dispute. The statistician was told that severance is determined by length of

service with the company. To determine how generous the severance package had been, a

random sample of 50 Laurier ex-employees was taken. For each, the following variables

were recorded:

Number of weeks of severance pay

Number of years with the company

The statistician would like to use the above sample information and the appropriate

statistical method to determine whether Bill is correct in his assessment of the severance

package. Your report should have the following qualities:

? Your report must be in a genuine report format with problem definition, analysis

and final conclusion.

? All important analysis steps needs to be followed to arrive at the model to be

used for prediction. Attach the details of your analysis at the end of your report.

Very simplistic analysis with no sufficient details is assigned a near zero credit.

Just running excel does not guarantee any credit.

? Your final conclusion should use both the 95% confidence and prediction

intervals. Improper use of these and corresponding wrong/sloppy interpretations

is highly penalized.

Graded Case Study Topic: Chapter 14 (Regression)

Phase 1 (Proposal):

Please complete the following tasks for this phase.

Write 1/2 to 1-page report and attach your charts.

a) Describe the problem background and purpose of the study.

b) Describe the variables included in the case.

c)Use appropriate descriptive statistics to explore and summarize the data, both numerical
and graphical.
Are there any outlier values in severance pay?

d) Remember to interpret the findings and indicate how you will complete the analysis.