The Use of Individual Effects and Residuals in Fitting Equations to Data

Componentrplus-residual plots, plots of the estimated effect of each independent variable at each observed data point plus corresponding residuals, are used as an aid (1) to choose an appropriate form of the equation, (2) to observe the distribution of the observations over the range of each independent variable and (3) to estimate the influence of each observation on each component of the equation. With the help of indicator variables and the C p search technique, far-out observations can be tested to see if their responses are compatible with those of the remainder of the data. Examples are given from studies of manufacturing and marketing data in which either a new form of the equation is found or a new insight is gained into the limitations and strengths of the fitted equation.