Question

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
17	25
14	30
24	38
32	45
36	55
21	39
28	41
35	47
44	60
42	48 Develop the estimated regression equation that relates annual maintenance expense (in hundreds of dollars) to weekly usage hours (to 3 decimals). Expense =  +  Weekly Usage Test the significance of the relationship in part (a) at a .05 level of significance. Compute the value of the F test statistic (to 2 decimals). The p value is - Select your answer -less than .01between .01 and .025between .025 and .05between .05 and .10greater than .10Item 4 What is your conclusion? - Select your answer -Conclude that there is a significant relationship between expense and weekly usageDo not conclude that there is a significant relationship between expense and weekly usageItem 5 Jensen expects the new machine to be used 30 hours per week. What is the expected annual maintenance expense in hundreds of dollars (to 2 decimals)? Develop a 95% prediction interval for the company's annual maintenance expense for this machine (to 2 decimals). (  ,  ) If the maintenance contract costs $3000 per year, would you recommend purchasing the contract for the new machine in part (c)? - Select your answer -Yes, the expected maintenance expense is greater than $3000No, the expected maintenance expense is less than $3000Item 9

Answer 1

a)

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.922840649
R Square	0.851634864
Adjusted R Square	0.833089222
Standard Error	4.339925578
Observations	10
ANOVA
	df	SS	MS	F	Significance F
Regression	1	864.9203678	864.9203678	45.92102358	0.00014117
Residual	8	150.6796322	18.83495402
Total	9	1015.6
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	14.78522355	4.3559511	3.394258386	0.009440293	4.7403823	24.8300648
Weekly Usage	0.956135715	0.141095694	6.776505263	0.00014117	0.630768461	1.28150297

Develop the estimated regression equation

annual = 14.7852 + 0.9561357* weekly usage

Test the significance of the relationship in part (a) at a .05 level of significance.

p-value = 0.00014117 < 0.05

the result is significant

Compute the value of the F test statistic (to 2 decimals).

=45.92102358

p-value = 0.00014117

p-value is less than .01

since p-value < 0.01

we Conclude that there is a significant relationship between expense and weekly usage