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May 26'23
Exercise
You have constructed the following regression tree predicting unit sales (in thousands) of car seats. The variable ShelveLoc has possible values Good, Medium, and Bad.
| Variable | Observed Value |
|---|---|
| ShelveLoc | Good |
| Price | 120 |
| Age | 57 |
| Advertising | 12 |
Determine the predicted unit sales (in thousands) for the above observation based on the regression tree.
- 4.7
- 6.6
- 7.4
- 9.2
- 9.4
Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
May 26'23
Key: D
For the first split, ShelveLoc = Good, the answer is no, and the branch to the right is taken.
For the second split, Price = 120 ≥ 110, the answer is yes, and the branch to the left is taken. The node has a predicted value of 9.2.
Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.