Mr. Bear is concerned about the quality of material he has received from several
ID: 455785 • Letter: M
Question
Mr. Bear is concerned about the quality of material he has received from several vendors in the past year. The defect rate is simply too high. To get a better handle on the problem, Mr. Bear analyzed the last 24 orders, and he built a model using the variables shown in the regression output below. After reviewing the regression model, consider the correlation report appearing directly below the regression output. This report depicts the correlation of potential variables, which are not included in the regression model, with number of defects. Based on this report, which one of the these potential variables do you think would be most likely to improve the performance of the regression model? Note: the last two variables in the regression model are dummy variables: 1 if yes and 0 if no.
Shipping distance
Manufactured in Asia
Manufactured in US
Manufactured in Europe
Manufactured in other
a.Shipping distance
b.Manufactured in Asia
c.Manufactured in US
d.Manufactured in Europe
e.Manufactured in other
SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.719821857 0.518143506 0.416700033 2.91839423 24 ANOVA df MS Significance F Regression Residual Total 4 174.0098606 43.50246515 5.107706712 0.005757227 19 161.82347278.517024881 23 335.8333333 P-value Lower 95% Upper 95% Coefficients Standard Error 5.511803998 2.965639271-1.858555102 0.078652657-11.71895833 0.695350333 0.2245807280.0865132412.59591164 0.0177397 0.043506435 0.405655022 0.000266786 0.0001526331.74788944 0.09662495 -5.2679E-05 0.000586251 t Stat Intercept Time Period Order Size Metallurgical Testing 3.3942516151.32847423 2.554999967 0.019352635 0.613723095 6.174780135 ISo 9000 4.152114626 1.284843312 3.231611659 0.004391425 1.462906668 6.841322583Explanation / Answer
Since, the absolute value of manufactured in asia has a highes correaltion with defects. It should be added. the correct opetion is option (B)
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