In: Statistics and Probability
The total expenses of a hospital is determined by many different factors but two of these factors are the number of beds and the number of patients that are admitted to the hospital. Data was collected on 14 hospitals and is listed in the table.
Hospital |
Number of beds |
Admissions (1,000s) |
Total expenses ($1,000,000 |
1 |
215 |
77 |
57 |
2 |
336 |
160 |
127 |
3 |
520 |
230 |
157 |
4 |
135 |
43 |
24 |
5 |
35 |
9 |
14 |
6 |
210 |
155 |
93 |
7 |
140 |
53 |
45 |
8 |
90 |
6 |
6 |
9 |
410 |
159 |
99 |
10 |
50 |
18 |
12 |
11 |
65 |
16 |
11 |
12 |
42 |
29 |
15 |
13 |
110 |
28 |
21 |
14 |
305 |
98 |
63 |
a) Develop a model using the number of beds to predict the total expenses of a hospital. How well does the model fit the data?
b) Develop a model using the number of admissions to predict the total expenses of a hospital. How well does the model fit the data?
c) Develop a model using the number of beds and admissions to predict the total expenses of a hospital. How well does the model fit the data?
d) Do you think that both variables (number of beds and admissions) should be included in our prediction model? Why or Why not?