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An Excel Solver Exercise to Introduce Nonlinear Regression
Author(s) -
Pinder Jonathan P.
Publication year - 2013
Publication title -
decision sciences journal of innovative education
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.52
H-Index - 19
eISSN - 1540-4609
pISSN - 1540-4595
DOI - 10.1111/dsji.12009
Subject(s) - computer science , solver , nonlinear regression , regression analysis , nonlinear system , ordinary least squares , software , proper linear model , process (computing) , machine learning , regression , linear regression , artificial intelligence , polynomial regression , statistics , mathematics , physics , quantum mechanics , programming language , operating system
Business students taking business analytics courses that have significant predictive modeling components, such as marketing research, data mining, forecasting, and advanced financial modeling, are introduced to nonlinear regression using application software that is a “black box” to the students. Thus, although correct models are estimated, students often do not obtain a thorough understanding of the nonlinear estimation process. The exercise presented in this article was created to demonstrate to students the need for nonlinear regression estimation—rather than using linear transformations and Ordinary Least Squares (OLS) and subsequently demonstrate the nonlinear optimization process to estimate nonlinear regression models. Using the spreadsheet exercise, students can see effects on the fit of the model by changing the model parameters as they change the values of the decision variables. After applying the spreadsheet to further exercises, students have expressed a deep understanding of the linear regression software. This exercise is innovative because the active learning exercise requires the students to make the logical connections between the structure of the model, the model's parameters, and the objective function.