Last answered:

10 Nov 2023

Posted on:

22 Oct 2022

0

Why is the answer "No" for the first question

Hi,
Can you elaborate why is the answer No for the first question?  cannot we conduct a regression analysis if there is a relationship between cones orders and sales of ice-cream?

3 answers ( 0 marked as helpful)
Posted on:

12 Nov 2022

1

imo there is no any form of propably causality. Beside trivial case (order 0 cones, sell 0 icecreams etc)

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Posted on:

14 Sept 2023

0

Hi - I think causality is the key here.  There is a relationship between the two events, however the one event occurring does not necessarily cause the other event to occur.  For instance, ordering a certain number of cones will not cause a certain number of ice creams to be sold.  In other words, the ordering of a certain number of cones does not mean that a certain number of ice creams will be sold as other factors (daytime temperature, shop location, flavors of ice cream) cause ice cream to be sold.

Posted on:

10 Nov 2023

0

There is a dual causality relationship between ice cream sold and cones purchased.


Let's use extreme examples to make it easier to understand: If I order 1 cone, I cannot sell more than 1 ice cream, even if it's during a HOT day. There is a cause there.

If I order 100 cones, selling ice cream will depends on multiple factors, such as temperature, but also price. Let's say I made a clerical error and ordered 1000 cones. I will most likely lower the price, or offer a 2-for-1 rebate. This would CAUSE an increase in ice cream sold.


There is also a causality effect the other way around. On most Just-in-Time inventory management, number of ice cream sold will determine how much cones I should purchase on my next batch.

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