Question

(Solve this problem manually.) Jensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine. Managers feel that maintenance expense should be related to usage, and they collected the following information on weekly usage (hours) and annual maintenance expense (in hundreds of dollars):

    Weekly Usage (hours)        Annual Maintenance Expense ($100)
        17                    17
        20                    30
        28                    40
        32                    38
        18                    31
        24                    32.5
        42                    41
        35                    45

(a)    Using a simple linear regression model with “Annual Maintenance Expense”
    being the dependent variable and “Weekly Usage” being the independent
    variable,

(f)    Find a 99% confidence interval for β1 and interpret the interval.
(g)    Test to see if “Weekly Usage” affects “Annual Maintenance Expense,” and if so,     in what direction? Use α = 0.05 and interpret your results.
(h) Based upon your calculation, do     you believe your model is a good model? Show your work and explain

Answer 1

I think our model is moderately good because the model is useful for prediction of Annual maintainance expenses 67 %