Artificial Intelligence model

1. You have been asked to develop a Regression Analysis for XYZ Mart in order to develop an Artificial Intelligence model to determine vegan shoppers.  (10 points)

a. Tell me for what reason you would use each of the following parts of the Solver window for this Regression Analysis if you were to use Linear Regression:

i. Set Objective:

ii. By Changing Variable Cells:

iii. Subject to the Constraints:

iv. Select a Solving Method:

b. Tell me why you would recommend using Logistic Regression instead of Linear Regression for this problem?

c. Explain what is meant by “training” the data for this type of model.

d. How is the “test set” of data different from the “training set” of data?

2. The trust office at XYZ National Bank needs to determine how to invest $100,000 in bonds to maximize the annual return. The options are:

Bond  Annual Return  Maturity  Risk  Tax-Free 

A  9.5%  Long  High  Yes
B  8.0%  Short  Low  Yes
C  9.0%  Long  Low  No
D  9.0%  Long  High  Yes
E  9.0%  Short  High  No 

The office wants to invest at least 50% of the money in short term issues and no more than 50% in high-risk issues. At least 30% of the funds should go in tax-free investments and at least 40% of the total return should be tax free.

Use the following Excel Optimization Analysis Spreadsheet solution for the above problem for the questions that follow the spreadsheet.