Introduction

So far in the unit we have looked at the variability of just one factor for example, sales or income. In this section we find out how to examine the relationship between two variables. We will look only at situations where data can be measured on a continuous scale.

Examining relationships between variables is a common task for managers.  For example:

• A marketing manager might want to look at the effect of advertising on sales
  
• A production manager might want to investigate how unit cost depends on length of production run
  
• A personnel manager might want to investigate the usefulness of recruitment-test results in predicting ultimate performance.

If we suspect there is a relationship, then we can investigate it by collection past data. The data in each case will consist of pairs of values, corresponding to the values of the two variables at a particular time or place, or for particular people or events.