Question

Marv Johnson, city manager of Filkburg, Virginia, wants to develop a better understanding of the factors that influence vehicles maintenance and costs. Mr. Johnson has data on 100 vehicles in the city’s vehicle fleet. The dependent variable is the annual maintenance cost per vehicle (MCOST). The independent variables include total vehicle mileage (TMILE), a dummy variable coded1 for emergency service vehicles and coded 0 for all other types of vehicles (VTYPE). Assist Mr. Johnson by generating a regression equation using these data. What substantive conclusions can be reached about factors that affect vehicle maintenance costs?

Answer 1

Ashville City Maintenance Chief wants to cut back on the costs of maintaining the city automobile fleet. Knowing that the city cars are kept for only year, he feels that the city's periodic maintenance schedule may cost more than it is worth. He randomly selects a sample of 300 cars. Among those 300 cars, 75 cars receive no maintenance unless they break down. The rest of the cars are maintained using the usual schedule. At the end of the year he finds the results pertaining to average costs per vehicle in these two groups (shown below). What can you tell the Ashville City Maintenance Chief about this experiment: is the difference across groups statistically significant at 95% confidence level? Use the five step model to answer this question. Write a sentence or two (using words, not just numbers!) summarizing your results for a wider audience.

Variable "Costs per Vehicle":

No Maintenance Maintained Cars

= $625 = $575

S₁ = 150 S₂ = 200

N₁ = 75 N₂ = 225