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
15	20
12	25
22	33
30	40
34	50
19	34
26	36
33	42
42	55
40	43

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)?

Answer 1

A)Regression equction that relates annual maintenance expense

Y=11.69749+0.9561(X)

B) F statistics=45.92

Hypothesis:

There is no relationship between maintenance expense and usa

There is relationship between maintenance expense and usa

P value=0.00014<0.05

Reject H₀ P value less than 0.05

C)

There is no relationship between maintenance expense and usa

There is relationship between maintenance expense and usa

Test statistics=45.92

Critical value =5.30

Reject H₀ Test statistics > critical value

D)

Jensen expects the new machine to be used 30 hours per week. What is the expected annual maintenance expense in hundreds of dollars

Y=11.69749+0.9561(30)

=40.38

e)95% prediction interval for the company's annual maintenance expense for this machine

38.08 to 42.68

the maintenance contract costs $3000 per year, would you recommend purchasing the contract for the new machine in part (c)?

Yes we are 95% Confident that without the contract