The Apex Corporation wants to improve its cost control program. Build a regressi
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Question
The Apex Corporation wants to improve its cost control program. Build a regression model to predict the total manufacturing cost per month from the variables identified in the table below. The data are contained in the worksheet named COST.
x4, total direct labor hours used each month (LABOR)
y, total manufacturing cost per month in thousands of dollars (COST) x1, total production of paper per month in tons (PAPER) x2, total machine hours used per month (MACHINE) x3, total variable overhead costs per month in thousands of dollars (OVERHEAD)x4, total direct labor hours used each month (LABOR)
Cost Control 3: The Apex Corporation wants to improve its cost control program. Build a regression model to predict the total manufacturing cost per month from the variables identified in the table below. The data are contained in the worksheet named CoST. y, total manufacturing cost per month in thousands of dollars (COST) X1, total production of paper per month in tons (PAPER) x2, total machine hours used per month (MACHINE) x3, total variable overhead costs per month in thousands of dollars (OVERHEAD) x4, total direct labor hours used each month (LABOR) (a) Is multicollinearity an issue with this model? Yes. Because the variance inflation factors for many of the independent variables are sufficiently large Yes. Because the variance inflation factors for many of the independent variables are sufficiently small No. Because the variance inflation factors for many of the independent variables are sufficiently small Yes, Because the p-value for at least one independent variable is less than the significance level No. Because the p-value for at least one independent variable Is less than the significance level No. Because the variance inflation factors for many of the independent variables are sufficiently large. (b) Which variable appears to be the least collinear with the others? O OVERHEAD PAPER e MACHINE LABORExplanation / Answer
a) 1) Yes, the variation inflation factor for many of the variables is sufficiently large.
b) Labour, as the corrlation of labour with others are 0.94
c) Paper , as the corelation of paper with Overhead and machine are 0.99
COST PAPER MACHINE OVERHEAD LABOR COST 1 PAPER 0.998 1 MACHINE 0.998 0.99 1 OVERHEAD 0.99 0.99 1.00 1 LABOR 0.94 0.94 0.95 0.94 1Related Questions
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