1. Multiple Regression Analysis The manager of the BuieCreek Police department motor pool wants to develop...

1. Multiple Regression Analysis

The manager of the BuieCreek Police department motor pool wants to develop a forecast model for annual maintenance on police cars, based on mileage in the past year and age of the cars. The following data have been collected for eight different cars:

Miles Driven	Car Age (yr)	Maintenance cost
16,320	7	1,200
15,100	8	1,400
18,500	8	1,820
10,200	3	900
9,175	3	650
12,770	7	1,150
8,600	2	875
7,900	3	900

A. Use Data Analysis in Excel to develop a multiple regression model and answer the following questions.

B.Write regression equation. Is the overall multiple regression result reliable? Explain why or why not by discussing R2 and F test. Notes: Simply mentioning the numbers without elaboration will earn no credit.

C. How would an additional year of car age affect the annual maintenance cost? Increase or decrease? By how much? Is it statistically significant at 5% level? Explain.

D. How would an additional 1000-mile driven affect the annual maintenance cost? increase or decrease? By how much? Is it statistically significant at 5%?

E. Forecast the annual maintenance cost for a police car that is 10 years old and will be driven 20,000 miles in 1 year. Is this forecast reliable? Explain why or why not?

Expert Solution

orchestra answered 1 year ago

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