-BAFN 305 - Multiple Regression QuestionsThe attached .docx

-
BAFN 305 - Multiple Regression Questions
The attached provides descriptive statistics, correlations and a
multiple regression run for four variables.
The four variables are about corporate earnings, debt, sales and
ownership. Sample size is 400
companies. You are provided means, standard deviations,
correlations and two regression models, a full
and reduced model.
The variables are: Earnings per share (EPS) - the 'Y'variable-,
Company Debt, measured in millions of dollars,
Annual Sales, measured in millions of US dollars, and
Public or private ownership, a binary of (1,0) with 1 assigned to
public.
Answer the following:
L. What percent of the companies are private. How many is that
2. The best predictor of EPS is
3. The weakest predictor of EPS is
4. ldentify the independent variable(s) understudy
5. A multiple regression model for EPS = f(Debt
Sales,Ownership] was run and is noted on the

attached. Answer the following:
a. Coefficient of determination is
b.TestthehypothesisthatHop=0'AIphaat.05(AcceptorReject}-
a. State the critical value
b. State the computed value
c. State the p-value
d. State the decision
e. State the conclusion.
c. State the regression equation to forecast EPS.
d. Test the hypothesis to determine the importance of each
variable.
a. State the critical value for the test - Alpha at .01 TT
b. State the computed value and the p-value for each
c. State the decisions.
d. State the conclusions.
6. lf you completed the above, you evaluated the 'Full Model'
a. Would you create a reduced model based on the analysis
above.
b. lf so, which variables would be kept for the reduced model.
c. lf you ran the reduced model, why did you remove the
variable, multicollinearity or lack
of a relationship with 'Y'.
d. Would the model provide good prediction of EPS._ Why
7

Full Model - Earnings = f(Debt,Sales,Ownership)
Summary
R-Square .75
Standard error .75
Cases 400
Reduced Model - Earnings = f(Debt, Sales)
Summary
R-Square .71
Standard error .80
Cases 400
Earnings (per sh) Debt Sales Public/Private(1,0
Means 3.00 20 (million) 30 (million) .65
Standard Deviations 1.50 8 (million) 10 (million) .30
Correlations Earnings Debt Sales Public/Private(t,0)
Earninss 1.00
Debt -.58 1.00
Sales 0.40 0.40 1.00
Public/Private (1,0) 0.30 =.25 o.41 1.00
ANOVA Sum of squares Df Mean Square F p-value
Regression 7,500 3 2.s00 396.20 .000

Residual 2.s00 396 6.31
Total 10,000 399
Variable Coefficient Standard Error t/z statistic p-value
lntercept 1.25
Debt -.10 xxxxxxxx -2.70 .006
Sales 0.15 xxxxxxxx L.45 .090
Public/Private 0.08 xxxxxxxx L.40 .096
ANOVA Sum of squares Df Mean Square F p-value
Reeression 7,too 2 3s50 486.30 .000
Residual 2,9OO 397 7.30
Total 10,000 399
Variable Coefficients Standard error t/z statistic
lntercept 1.85
Debt -.L4 xxxxxxxx -2.90 .003
Sales .20 xxxxxxxx 2.00 ,o23
Comparative Analysis

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Microsoft Dynamics & SAP ECC6.0 Comparative Analysis
1
Introduction
...............................................................................................
................................................... 2
Software Platforms
...............................................................................................
.................................... 2
Microsoft
...............................................................................................
................................................ 2

SAP
...............................................................................................
......................................................... 2
Human Resources
...............................................................................................
...................................... 3
SAP, Human
Resources................................................................................
.......................................... 3
Microsoft, Human Resources
...............................................................................................
................. 4
Comparison
...............................................................................................
.................................................... 5
Table 1: Comparison of Systems
...............................................................................................
................ 5
Interpretation
...............................................................................................
............................................. 7
Considerations
...............................................................................................
............................................... 8
Culture of the firm/Nature of the business
...............................................................................................
8

Interconnectivity
...............................................................................................
........................................ 8
Costs (short term and long term)
...............................................................................................
............... 8
Conclusion
...............................................................................................
...................................................... 9
References
...............................................................................................
................................................... 10
Appendix A
...............................................................................................
................................................... 11
2
Introduction
This project is the analysis of two different ERP systems,
Microsoft Dynamics GP10 and SAP ERP Release
6.0.

Software Platforms
Microsoft
Microsoft Dynamics GP10 is the 2010 release of this line of
Microsoft’s ERP system. There are 4
different offerings in the Dynamics product line: SL, NAV, GP
and AX.
Dynamics SL is the ERP offering that handles basic project
management and accounting across multiple
divisions of a firm. It is targeted specifically to government
contractors, distribution firms, and
construction management corporations (Microsoft, 2011).
Dynamics NAV is a comprehensive ERP suite that is targeted at
mid-size companies. It incorporates
more than just the basic PM and accounting functions that SL
offers, but is most cost effective for the
mid-sized company that needs an ERP solution (Microsoft,
2011).
Dynamics GP, the system discussed in this analysis, is used by
more than 41,000 customers throughout
the world. Like NAV, it moves beyond basic financials and
operations functions, and is a complete ERP
solution. Microsoft touts this system as requiring lower
implementation, and long term maintenance

costs, than similar SAP or Oracle products (Microsoft, 2011).
Dynamics GP offers financial, human
resources, project management, supply chain, sales and
marketing, manufacturing, and services
information functionalities (Microsoft, 2011). It also offers
basic business intelligence reporting.
Dynamics AX is Microsoft’s Cadillac program. It is the
complete ERP solution for larger corporations. It
is tailored for global corporations, as well as state of the art
manufacturing firms, and several other
industries. AX offers all of the functionalities of GP and more
in-depth business intelligence reporting, as
well as information on environmental sustainability, since the
green movement in the US has really
taken hold (Microsoft, 2011).
SAP
The SAP ERP Central Component (ECC) is the follow up to
SAP’s R/3 system. The SAP ERP is part of the
SAP Business Suite, which is a software suite designed to help
companies optimize their business
functions (SAP, 2011A). The SAP ERP system consists of 4
different modules: Financials, Human Capital
Management, Operations and Corporate Services.

Financials offers core accounting and financial processes to
enable firms to accurately track expenses,
revenues, receivables, profit and various other
accounting/finance functionalities (SAP, 2011B).
Human Capital Management contains the human resources,
payroll, talent management (recruitment,
training, promotions, etc.), and workforce analysis functions
(SAP, 2011B).
Operations contains functions for the purchasing, research and
development, manufacturing and sales
and service divisions of the firm. (SAP, 2011B).
3
The final module, Corporate Services, assists with the
management of assets, including real estate,
enterprise, project portfolios, environmental health and safety,
and travel management functions (SAP,
2011B).
Human Resources
The area(s) chosen for comparison in this paper are contained in
the ‘Human Resources’ functions of

each package.
Human resource departments handle the employee side of the
business. These departments handle
recruitment and hiring of new employees, terminations,
promotions, and payroll administration. Most
importantly, HR departments handle compliance with federal
standards such as obtaining I-9 forms from
immigrants, ensuring the offering of COBRA to all terminated
or resigned to employees, and establishing
procedures to prevent harassment or discrimination suits.
Continuing on this front HR departments also
handle administration of benefits, such as workplace retirement
plans, life and health insurance, and
various other functions (such as tuition reimbursement)
(Winning, 2009).
The role of human resources has changed over the years.
Originally, the HR department was viewed as
an extension of the executive policies of a firm. It would stand
in the way, as a roadblock of sorts, of the
movement of companies into the future. HR
employees/departments were merely those who
presented and filled out all of the necessary paperwork
associated with personnel management and

benefits administration. Now, the HR department is becoming a
source of strategic advantage. The HR
department is an adaptable, ever changing department focusing
on employee relations and
performance management and training, all of which are focused
on growing employees to benefit the
company (Heathfield, 2011).
This comparative analysis will focus specifically on the creation
of departments, divisions, and job (or
positions) within the firm, as well as the creation of employees
to fill those open positions.
SAP, Human Resources
The SAP system provides many different capabilities for the
Human Resources Departments to use in
performing their tasks. SAP focuses on aligning the strategic
objectives of the firm with the actions of
the workforce, and on achieving high levels of process
efficiency. It provides capabilities in 3 functional
areas (SAP, 2011C):
1) Talent Management – The SAP system provides many
different options for the recruiting and
development of a company’s workforce. Under talent
management the company can recruit

employees to the company. They can also monitor employee
performance, as well as enter
performance reviews into the system. Utilizing this
information, companies that run SAP can
utilize the succession management application which enables
the firm to track high
performing/high potential employees.
2) Core HR and Payroll – This provides the very basics of HR
functions. It has modules such as
benefits management, attendance and time reports, and payroll
and legal reporting. This
functional area would be meeting the very basic needs of an HR
department.
4
3) Workforce Analytics – These analytics include functions
such as workforce planning where the
HR department can plan future workforce needs and obtain
information such as turnover rates
in the workforce. This also enables the firm to create
benchmarks for the workforce to compare

against industry standards and see where the firm is relative to
the competition. Finally, the
workforce analytics area enables the firm to ensure that their
business activities are aligned with
their strategic objectives by monitoring the actions of the
workforce.
Microsoft, Human Resources
Microsoft focuses less on the alignment of strategic objectives,
and more on accessing the potential of
the workforce by ensuring everything is operating as efficiently
as possible. Microsoft touts GP10 as
excelling in 3 areas beyond just the basic HR functions
(Microsoft, 2011B):
1) Enhanced HR tools – Through the recruitment application it
streamlines the recruiting and hiring
process wasting as little time as possible in the entering and
transferring of data. This also
assists in the identification of applicants for potential positions.
It also enables the firm to
implement and practice fair and consistent hiring practices,
which will keep the firm out of any
EEO compliance issues.
2) Advanced Health and Wellness Functions – These functions
enable the firm to keep tabs on the

health of the workforce and look out for any disturbing patterns.
This will enable firms to urge
employees to seek medical advice and also keep the workforce
as healthy and productive as
possible. Utilizing this system also ensures compliance with
Worker’s Compensation and long
term disability requirements by providing reminders for follow
up reports with employees and
their doctors.
3) Information Accessibility – By centralizing all of the data,
the HR department will be able to
quickly and efficiently gain access to workforce information. It
enables supervisors to manage
teams more effectively by evaluating skill sets and building
diverse, powerful teams.
Additionally, centralized data allows for easier benefits
enrollment for employees by giving
employees access to open enrollment and allowing them to
make their own changes to their
benefits.

5
Comparison
When running through SAP and the Microsoft system, there
were many similarities and a few
differences. In terms of overall functionality both systems were
generally the same. For instance with
the creation of employees it gives you all of the basic
necessities for creating the employee, there are
however some smaller differences in the general process of
creating the various items.
Please see table 1, located below, for a comparison of the two
systems. Additionally, Appendix A
contains some screenshots for comparison of the two systems.
Table 1: Comparison of Systems
General
SAP ECC 6.0 Microsoft Dynamics GP10
Interface
More training necessary. In the SAP system,
users really need to understand what to do
beforehand. It's not like Microsoft where

the user can just pick it up and begin creating
divisions, etc.
Intuitive - the folder scheme is set up as an
easy point and click atmosphere. Setup very
much like a Windows interface. Menu's pull
up immediately when you click on a
functionality (like Human Resources or
Financial)
Creation of
functions
Once the user is in the correct module its
much more methodical. The system walks
the user through step-by-step in the creation
of the various departments, divisions,
companies, etc.
Windows tend to pop up with the majority of
information in the first window. However, it
wouldn't necessarily require users to go
through the process of clicking on different
buttons to get different options
Reports
Use crystal reports to export to various file
types (such as excel or word)
Exports directly to MS office files without use
of any intermediary system
Ease of HR use
Has the 'Manager's Desktop' which allows for
managers to quickly pull up information and
reports on employees

Standard, intuitive set-up allows for HR
managers to quickly navigate through
windows
Creating Divisions
SAP ECC 6.0 Microsoft Dynamics GP10
Name Organizational Unit Division
Creation Can create multiple units at one time Create one
division at a time
Division
Information
After units are created, have to go back and
edit the data after the fact
Advantage of one at a time is that all
information (address, codes, phone #'s, etc.)
is entered when Division is created
6
Table 1, cont’d.
Creating Departments

Name Business Unit Department
Creation Can create multiple units at one time One at a time
Dept. Information
Go back and edit after creation to get
information about unit in the system
Created one at a time, and can immediately
go into extra information
Organizational
Charts
Much easier, business units create under the
different divisions by selecting the Org. Unit
and then clicking create
There is no option for adding a department
to a division immediately, and you need to
go in later and re-organize to do it
Create a position
Process
One piece of information at a time, begin
with title of position and then move to
description, etc.
All information needed pops up with first
window unlike SAP, everything is up
immediately instead of progressing through

windows
Creating Employees
Process
SAP walks the user through up to 10
infotypes where all initial employee
information is entered
Brings up the screen with all required
information displayed
Entering Additional
Information
The Infotypes pretty much walks the user
through all information that needs to be
added. More user friendly once the menu's
have been properly navigated
User may click on additional information
buttons to add other, non-required info such
as salaries, etc.
Assigning to a Position
Name Vacant Position Position Seats
Filling position
Assign a holder to the vacancy with a start
and end date
Fill the seat with a start and end date

7
Interpretation
As can be seen from the above table, the majority of differences
lie in the creation of items and the
amount of information able to be entered initially. Microsoft
tended to bring up all required
information on the first window, whereas SAP would walk the
user through each window methodically.
Each one has its benefits, SAP was easy once the menu was
navigated properly but Microsoft made it
much easier to get to the initial menu. Additionally, when using
SAP the user goes through all windows
to have the opportunity to enter a lot of the information for
employees, but if this much isn’t needed
they will be skipping windows and wasting time.
Beyond that, differences are just in naming of the various
functions (positions vs. seats, organizational
units vs. divisions, etc.) and visual presentation. The one
presentation that I noted, and was impressed

with, was SAP’s organizational chart showing various
departments, divisions, positions, and employees
(see Appendix A for screenshots). The core functionalities of
each are generally the same, because
much of the information is necessary for compliance and for
general administration of payroll and
benefits regardless of what type of firm is using the package.
Additionally, both systems provide options
for adding spousal and family information, as well as other
general information about an employee
(such as disabled status, skill sets, training, etc.). This was as I
expected, because as mentioned before,
Human Resources across firms are generally the same with
differences lying in the types of benefits or
different compensation methods.
8
Considerations
While both systems will fill the general needs of any firm (in
terms of HR), there are several factors that

should be considered when implementing an ERP system.
Culture of the firm/Nature of the business
The culture of the firm and the nature of how they do business
is a critical factor when deciding whether
or not to implement an Enterprise Resource Planning system.
As seen in several of the case studies
discussed this semester, the way in which a firm does business
affects how and if an ERP system can be
implemented. ERP systems, for the most part, operate on best
practices methodologies, but if the firm
has achieved a competitive advantage, or a key differentiator,
through their business methodologies
then a best practices approach most likely will not work. Firms
will need to evaluate how much
customization the ERP system will need in order to obtain a
system that allows the firm to maintain their
own best practices. Failing to consider the nature of the
business may lead to potential catastrophes
during implementation.
Interconnectivity
The firm must also consider how easily the ERP system can be
modified or communicate with other

systems, or have bolt-on programs added to the system. Many
implementations don’t involve the full
roll out of features in the ERP suite, so legacy systems may
remain in place, at which point the ERP
system would need to be modified to feed information into and
pull information from these systems.
Both Dynamics and ECC support bolt-ons, and are also to be
customized through programming language
(in the ABAP language for SAP or Dexterity for Dynamics)
(Wikipedia, 2011). These customizations,
however, drive up the cost of implementation and also increase
maintenance and upgrade costs
because software manufacturers typically don’t support
customizations (since they are after market).
Costs (short term and long term)
The final factor to be considered is that of the cost of having
the system. This cost includes the
implementation cost, licensing fees, training, and long term
maintenance costs. Implementations are
very time consuming and thus extremely costly, both in terms of
internal manpower required (if done
right) and budgeted costs for external consultants and
programmers. Additionally, there are licensing
fees that are charged by the software firm (such as SAP, Oracle,

or Microsoft). On top of this is the cost
of training the workforce in the use of the system and spending
the time to make the necessary cultural
changes to push the use of a centralized database/ERP system
for information storage. Finally, there are
the long term maintenance costs which can run upwards of 20 –
25% of the total cost of software
package. This means that after 4 – 5 years of paying
maintenance fees the firm has effectively
purchased a new software package (upgrades are typically
included in the cost, to entice firms to sign
these contracts). Overall implementation and maintenance of an
ERP system is extremely expensive, so
managers must consider whether or not the ERP will add value
and, most importantly, if they can afford
it.
9
Conclusion

Each system has its own strengths and weaknesses in overall
functionality. The SAP system is much
more difficult to navigate and should be treated as more of a
command based program than point and
click. Dynamics is truly point and click, which is a much more
user friendly option. The advantage to
SAP is that once a user is trained on the system, and
understands how to use it, it is a much more
powerful program. This is as expected, because SAP has been
producing ERP systems for over 40 years,
while Microsoft wasn’t even founded until 1975 (Microsoft,
2011A).
In terms of the scope of the comparative analysis, both
platforms are very similar in the creation of
divisions, departments, jobs and employees. The few main
differences involve where and when detailed
information about each item is entered and the ability to create
multiple units at one time (SAP) vs.
placing all necessary information in the system up front
(Microsoft).
Managers must consider several factors prior to choosing an
ERP system. While the factors discussed
above don’t comprise an exhaustive list they are 3 of the most
important factors that any manager

should consider when implementing an ERP system. As long as
these factors (plus others) are
considered, managers could choose either system based on
personal preferences, because
functionalities are very similar.
10
References
Heathfield, S.M. (2011) What does a HR Manager, Generalist or
Director Do? Retrived on 4/14/2011
from
http://humanresources.about.com/od/jobdescriptions/f/hr_job_m
gr.htm
Microsoft (2011A) Facts about Microsoft. Retrieved on
4/18/2011 from
http://www.microsoft.com/presspass/inside_ms.mspx
Microsoft (2011B). Human resources management in Microsoft
Dynamics GP. Retrieved on 4/18/2011
from http://www.microsoft.com/en-

us/dynamics/products/gp-hr-management.aspx
SAP (2011A). SAP Business Suite. Retrieved on 4/17/2011 from
http://www.sap.com/solutions/business-suite/index.epx
SAP (2011B). ERP Software from SAP. Retrieved on 4/17/2011
from
http://www.sap.com/solutions/business-
suite/erp/index.epx
SAP (2011C). SAP ERP HCM. Retrieved on 4/17/2011 from
http://www.sap.com/solutions/business-
suite/erp/hcm/featuresfunctions/index.epx
Winning , E. (2009) When is an HR department necessary?
Retrieved on 04/13/2011 from
http://www.ewin.com/articles/whnHR.htm
11

Appendix A
Comparative Screenshots
12
Creating Divisions
Microsoft
SAP
13
Creating Positions
Microsoft
SAP

14
Employee Creation
Microsoft
SAP
15
Position Assignment
Microsoft
SAP

16
SAP Manager’s Desktop
17
SAP Organizational Chart
Assignment A– Regression
Given the correlation matrix below, answer the questions below
the table.
Earnings
US/Not US (1US,0Not)
Debt
Sales
Employees

Earnings
1.0
US/NotUS
.40
1.0
Debt
-.60
-.05
1.0
Sales
.50
.10
.30
1.0
Employees
.30
-.25
.07
.20
1.0
1. ___________Who earns more, US or foreign corps
2. ___________Best predictor of earnings
3. ___________Who has more employees, US or foreign corps.
4. ___________Corp with higher debt have (higher,lower)
earnings.

5. ___________Corp with higher sales have (greater, lesser)
number of employees.
6. ___________Slope of the line for earning against debt would
be positive, negative or zero.
7. ___________Average earnings for US corps would be (higher
or lower) than average earnings foreign corps
8. ___________The average earnings for companies without
debt would be lover or higher than companies with $5 mil or
more in debt.
9. ___________Weakest predictor of earnings is
10. ___________Higher debt companies have significantly
higher numbers of employees.
You have the following statistics for earnings, debt and US/Not
US variables
Variable
Means
StDev
Earnings(ps)
2.50
1.50
Debt
5 (Million)
3 Million
US/Not US (1US,0Not)
.75
.25
1 ___________________________Specify the regression
equation for Earning against debt if the correlation between the
two was zero
2.
_____________________________________________________

________________________If the regression equation for
earnings against US/Not is Y’ = .80 X + 2.00. Interpret the
regression coefficient of .80. Estimate earning for US corps
and not US corps.
3. If a multiple regression for the three variables in the table
were:
Y’ = -.20 X1 + .75 X2 + 2.00
Interpret the regression coefficients (in terms of the variables.
Estimate earnings for a US company that has 3 (million) in
debt.
Assignment
1. With the following data, complete by hand or Excel sheet
a. _____________________The linear regression equation – y’
= b1 X1 + b0 - the slope and intercept – Y is shipping time, X
is Distance.
b. ______________________Forecast shipping time for a 700
mile distance.
c. ______________________Determine the correlation
coefficient
d. ______________________Determine the coefficient of
determination
e. ______________________Determine the standard error of
estimate
Shipping Time Distance
5 656
14 853
6 646
11 783
8 610
10 841
9 785
9 639
2. Complete the following ANOVA table and answer the

questions that follow.
Source
SS
df
MS
F
Regression
300
1
Residual
Total
500
99
a. ____________Number of ‘X’ variables
b. ____________Number of cases
c. ____________R2
d. ____________r
e. ____________Variance of Y
f. ____________ Critical value of F

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