To simulate the model, all the factors have been taken into consideration (carat, color, clarity, cut, certification, polish, symmetry, and wholesaler)

Since the given condition does not show the value of Wholesaler, predictions from Wholesaler 1 to 3 have all been applied.

FOUND:

The expected price by linear model is $2916.88 for Wholesaler #1.

The expected price by linear model is $3031.52 for Wholesaler #2.

The expected price by linear model is $1450.98 for Wholesaler #3.

2. Interpretation

Carat: As one unit increase of carat, the price would be increased by 1872.08.

Color: As the change of color, the price would be changed negatively.

Color Type Coefficient

Color Type Coefficient

0

Name

Value

Name

Value

1

ColourE

-164.31

2

ColourG

-229.79

3

ColourH

-301.72

4

ColourI

-339.41

5

ColourJ

-436.10

6

ColourK

-695.55

7

ColourL

-895.61

There are no rows in this table

Clarity: As the change of clarity, the price would be changed positivelyin most cases and negativelyin few cases.

Clarity Type Coefficient

Clarity Type Coefficient

0

Name

Value

Name

Value

1

ClarityI2

-589.02

2

ClaritySI1

654.45

3

ClaritySI2

560.80

4

ClaritySI3

290.02

5

ClarityVS1

744.73

6

ClarityVS2

691.73

7

ClarityVVS1

1015.05

8

ClarityVVS2

732.79

There are no rows in this table

Cut: As the change of cut, the price would be changed positively.

Cut Type Coefficient

Cut Type Coefficient

0

Name

Value

Column 3

Name

Value

Column 3

1

Cut.G

48.74

2

Cut.I

84.79

3

Cut.V

78.41

4

Cut.X

93.80

There are no rows in this table

Certification: As the change of certification, the price would be changed negativelyin most cases and positivelyin few cases.

Certification Type Coefficient

Certification Type Coefficient

0

Name

Value

Name

Value

1

CertificationDOW

-271.03

2

CertificationEGL

-308.77

3

CertificationGIA

10.77

4

CertificationIGI

-131.11

There are no rows in this table

Polish: As type change of Polish, the price would be positively.

Polish Type Coefficient

Polish Type Coefficient

0

Name

Value

Name

Value

1

PolishG

66.10

2

PolishI

244.09

3

Polishv

136.02

4

PolishV

77.79

5

PolishX

82.89

There are no rows in this table

Symmetry: As type change of Symmetry, the price would be changed positively.

Symmetry Type Coefficient

Symmetry Type Coefficient

0

Name

Value

Name

Value

1

SymmetryG

133.72

2

SymmetryV

149.06

3

SymmetryX

136.45

There are no rows in this table

Wholesaler: As the change of Wholesaler, the price would be changed either positively or negativelybased on the wholesaler type.

Wholesaler Type Coefficient

Wholesaler Type Coefficient

0

Name

Value

Name

Value

1

Wholesaler2

114.65

2

Wholesaler3

-1465.89

There are no rows in this table

3. Model Comments

Since the R-squared value is about 0.9861 which is very high, this model could be defined as a good model.

Question 2: Second Model (without wholesaler #3)

1. Impact and Comparison

FOUND:

By drawing the figure of carat and price relationship, it illustrates that the price of Wholesaler is much smaller than Wholesaler which reflects why Wholesaler #3 should be dropped.

Also, the Carat value in Wholesaler #3 is smaller than others presenting the low value which could be dropped.

2. Model Comments

Model 2:

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