** Need help finding the confidence & predicition intervals please. Case Study:
ID: 3237112 • Letter: #
Question
**Need help finding the confidence & predicition intervals please.
Case Study: Maintenance Contract
Business decision making is something that management must to do on a daily basis. Jensen Tire & Auto is a family owned auto service company. In recent months, business has been slow so in an effort to reduce cost, the company is deciding on whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine, which costs $5,000 per year, instead of maintaining their own machine. The owner feels that maintenance expense should be related to usage so he collected a random sample of 30 weeks of weekly usage (hours) and annual maintenance expense (in hundreds of dollars). For each week, the following variables were recorded:
Weekly usage (hours)
Annual Maintenance Expense ($100s)
However, he is unsure how to do the analysis. Knowing you are about to finish the course in business analytics, your manager recommended you to the owner and you are now appointed to do the analysis for the above sample information using the appropriate statistical method to determine whether Jensen Tire & Auto should purchase the maintenance contract by answering the following questions:
How many hours the company will have to use the machine per week if they were to buy the contract?
Comparing the usage from part a, how does this usage compare to the average usage per week? Use the weekly usage average to determine whether Jensen Tire & Auto should purchase the maintenance contract.
Your final conclusion should use both the 95% confidence and prediction intervals. Improper use
of these and corresponding wrong/sloppy interpretation is highly penalized.
Need help finding the confidence & predicition intervals please.
Weekly Usage (hours) Annual Maintenance Expense 13 17.0 10 22.0 20 30.0 28 37.0 32 47.0 17 30.5 24 32.5 31 39.0 40 51.5 38 40.0 25 19.5 24 49.0 20 31.7 22 41.3 12 40.5 11 37.4 25 14.4 19 35.0 25 34.1 21 35.2 22 26.8 29 24.4 17 29.7 12 35.2 10 20.1 28 37.3 10 33.2 16 31.1 30 41.6 13 29.9Explanation / Answer
We should use the linear regression model using Weekly use in hours as a dependence variable and Annul maintenance expenses as a independent variable. The result is given below.
From the analysis, the estimated p-value is 0.01 and less than 0.05 level of significance. Hence, we can conclude that the Anual Maintenance expenses has sigbificant association with the weekly use in hours.
How many hours the company will have to use the machine per week if they were to buy the contract?
Ans: the company will have to use the machine per week if they were to buy the contract is 7.65+0.42=8.07 hours.
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 7.650342497 5.289056553 1.446447 0.15915421 -3.18379858 18.48448357 Expenses 0.41703363 0.154188651 2.704697 0.011499555 0.101192501 0.732874759Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.