A supply chain manager is conducting a correlation analysis of factors that affe

Question

A supply chain manager is conducting a correlation analysis of factors that affect shipping cost at her firm. Results from her correlation analysis in Excel are shown in the table above. Which of the following conclusions is true?

None of the answers on this list are true.

Crude oil price and gasoline price are nearly perfectly correlated.

As shipping cost by truck decreases, rail freight demand decreases.

Truck shipping cost appears to be more correlated to crude oil price than to gasoline price.

Crude Oil Price Gasoline Price Truck Shipping Cost Rail Freight Demand Crude Oil Price 1 Gasoline Price 0.682567 1 Truck Shipping Cost 0.425118 0.623711 1 Rail Freight Demand -0.360133 -0.492503 0.582314 1

Explanation / Answer

A correlation coefficent of 1 means a perfectly correlated relationship which is not the case in Crude oil price and gasoline price .

Truck shipping cost appears to be more correlated to gasoline than to crude oil price. because of higher correlation coefficient.

Hence, the correct option is (a) None of these.

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