The president of a small manufacturing firm is concerned about the continual inc
ID: 3332297 • Letter: T
Question
The president of a small manufacturing firm is concerned about the continual increase in manufacturing costs over the past several years. The following figures provide a time series of the cost per unit for the firm's leading product over the past eight years.
Click on the datafile logo to reference the data.
Year
Cost/Unit ($)
Year
Cost/Unit ($)
1
20.00
5
26.60
2
24.50
6
30.00
3
28.20
7
31.00
4
27.50
8
36.00
(b)
Use simple linear regression analysis to find the parameters for the line that minimizes MSE for this time series.
If required, round your answers to two decimal places.
y-intercept, b0 =
Slope, b1 =
MSE =
(c)
What is the average cost increase that the firm has been realizing per year?
Round your interim computations and final answer to two decimal places.
$
(d)
Compute an estimate of the cost/unit for next year.
If required, round your answer to two decimal places.
Year
Cost/Unit ($)
Year
Cost/Unit ($)
1
20.00
5
26.60
2
24.50
6
30.00
3
28.20
7
31.00
4
27.50
8
36.00
Explanation / Answer
Using regression analysis tool we have below results,
(B)
b0 = 19.99
b1 = 1.7738
(c)
the average cost increase that the firm has been realizing per year = $1.77
(D)
for next year
y = 19.99 + 1.77*9 = $35.92
SUMMARY OUTPUT Regression Statistics Multiple R 0.921878 R Square 0.849859 Adjusted R Square 0.824835 Standard Error 1.97257 Observations 8 ANOVA df SS MS F Significance F Regression 1 132.1488 132.1488 33.96241 0.001123 Residual 6 23.34619 3.891032 Total 7 155.495 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept 19.99286 1.537014 13.0076 1.27E-05 16.23192 23.75379 16.23192 23.75379 X Variable 1 1.77381 0.304374 5.827728 0.001123 1.029033 2.518586 1.029033 2.518586Related Questions
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