Jensen Tire & Auto is in the process of deciding whether to purchase a maintenan
ID: 2946919 • Letter: J
Question
Jensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine. Managers feel that maintenance expense should be related to usage, and they collected the following information on weekly usage (hours) and annual maintenance expense (in hundreds of dollars).
Develop the estimated regression equation that relates annual maintenance expense (in hundreds of dollars) to weekly usage hours (to 3 decimals).
Expense = + Weekly Usage
Test the significance of the relationship in part (a) at a .05 level of significance.
Compute the value of the F test statistic (to 2 decimals).
The p value is - Select your answer -less than .01between .01 and .025between .025 and .05between .05 and .10greater than .10Item 4
What is your conclusion?
- Select your answer -Conclude that there is a significant relationship between expense and weekly usageDo not conclude that there is a significant relationship between expense and weekly usageItem 5
Jensen expects the new machine to be used 30 hours per week. What is the expected annual maintenance expense in hundreds of dollars (to 2 decimals)?
Develop a 95% prediction interval for the company's annual maintenance expense for this machine (to 2 decimals).
( , )
If the maintenance contract costs $3000 per year, would you recommend purchasing the contract for the new machine in part (c)?
- Select your answer -Yes, the expected maintenance expense is greater than $3000No, the expected maintenance expense is less than $3000Item 9
(hours) Annual
Maintenance Expense 17 25 14 30 24 38 32 45 36 55 21 39 28 41 35 47 44 60 42 48
Develop the estimated regression equation that relates annual maintenance expense (in hundreds of dollars) to weekly usage hours (to 3 decimals).
Expense = + Weekly Usage
Test the significance of the relationship in part (a) at a .05 level of significance.
Compute the value of the F test statistic (to 2 decimals).
The p value is - Select your answer -less than .01between .01 and .025between .025 and .05between .05 and .10greater than .10Item 4
What is your conclusion?
- Select your answer -Conclude that there is a significant relationship between expense and weekly usageDo not conclude that there is a significant relationship between expense and weekly usageItem 5
Jensen expects the new machine to be used 30 hours per week. What is the expected annual maintenance expense in hundreds of dollars (to 2 decimals)?
Develop a 95% prediction interval for the company's annual maintenance expense for this machine (to 2 decimals).
( , )
If the maintenance contract costs $3000 per year, would you recommend purchasing the contract for the new machine in part (c)?
- Select your answer -Yes, the expected maintenance expense is greater than $3000No, the expected maintenance expense is less than $3000Item 9
Explanation / Answer
a)
Develop the estimated regression equation
annual = 14.7852 + 0.9561357* weekly usage
Test the significance of the relationship in part (a) at a .05 level of significance.
p-value = 0.00014117 < 0.05
the result is significant
Compute the value of the F test statistic (to 2 decimals).
=45.92102358
p-value = 0.00014117
p-value is less than .01
since p-value < 0.01
we Conclude that there is a significant relationship between expense and weekly usage
SUMMARY OUTPUT Regression Statistics Multiple R 0.922840649 R Square 0.851634864 Adjusted R Square 0.833089222 Standard Error 4.339925578 Observations 10 ANOVA df SS MS F Significance F Regression 1 864.9203678 864.9203678 45.92102358 0.00014117 Residual 8 150.6796322 18.83495402 Total 9 1015.6 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 14.78522355 4.3559511 3.394258386 0.009440293 4.7403823 24.8300648 Weekly Usage 0.956135715 0.141095694 6.776505263 0.00014117 0.630768461 1.28150297Related Questions
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