Posted by GG on Tuesday, August 30, 2011 at 9:47pm.
The president of a company that manufactures car seats has been concerned about the number and cost of machine breakdowns. The problem is that the machines are old and becoming quite unreliable. However, the cost of replacing them is quite high, and the president is not certain that the cost can be made up in today’s slow economy. To help make a decision about replacement, he gathered data about last month’s cost for repairs and the ages (in moths) of the plant’s 20 welding machines.
a. Find the sample regression.
b. Interpret the coefficients.
c. Determine the coefficient of determination, and discuss what this statistic tells you.
d. Conduct a test to determine whether the age of a machine and its monthly cost of repair are linearly related.
e. Is the fit of the simple linear model good enough to allow the president to predict the monthly repair cost of a welding machine that is 120 months old? If so, find a 95% prediction interval. If not, explain why not
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