The materials handling manager of a manufacturing company is trying to forecast

Question

The materials handling manager of a manufacturing company is trying to forecast the cost of maintenance for the company's fleet of over-the-road tractors. The manager believes that the cost of maintaining the tractors increases with the age. The following data was collected Use POM for Windows' least squares-linear regression module to develop a relationship to forecast the yearly maintenance cost based on the age of a tractor. (Enter your responses rounded to three decimal places and include a minus sign if necessary) Y = + X where Y = Yearly maintenance cost in dollars and X = Age in years. If a section has 10 two-year-old tractors, what is the forecast for the annual maintenance cost? $ .(Enter your response rounded to two decimal places.)

Explanation / Answer

By using MS Excel ,

a . The least square linear regression line is ,

Y = 862.533 + 134.095X

b . Given : X = 10

Therefore ,

Y = 862.533 + 134.095*10

= 862.533 + 1340.95

= 2203.48

Therefore , If a section has 10 years - old tractors , then the annual maintance cost is $2203.48

Regression Statistics Multiple R 0.69957 R Square 0.48939 Adjusted R Square 0.45535 Standard Error 280.115 Observations 17 ANOVA df SS MS F Significance F Regression 1 1128075.627 1128075.627 14.37690557 0.001773105 Residual 15 1176966.373 78464.42486 Total 16 2305042 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept 862.533 207.0160095 4.166501833 0.000827044 421.2884058 1303.777 421.2884 1303.777 X Variable 1 134.095 35.36555099 3.791689013 0.001773105 58.71528389 209.4751 58.71528 209.4751

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