Question

Hill Top Products ran a regression analysis comparing total production and utility costs for the past six months.

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.969762217
R Square	0.940438758
Adjusted R Square	0.92058501
Standard Error	360.0073099
Observations	5
ANOVA
	df	SS	MS	F	Significance F
Regression	1	6139184.211	6139184.211	47.36832487	0.006283174
Residual	3	388815.7895	129605.2632
Total	4	6528000
	Coefficients	Standard Error	t Stat	P-value
Intercept	3056.58	454.25	6.728812231	0.006701298
X Variable 1	1.27	0.18	6.882465029	0.006283174

18.   To the nearest dollar, what would be the estimated total utility costs if 500 units were produced?

a.	$   544
b.	$4,236
c.	$3,692
d.	$3,147

19. The regression analysis shows an R square (R²) of .94. Which of the following statements best describes the meaning of R²?

a.	94 percent of the company's total costs are utility costs.
b.	94 percent of the variation in utility costs is NOT explained by the increase or decrease in production.
c.	94 percent of the variation in utility costs is explained by the increase or decrease in production.
d.	94 percent of the company's total utility costs are fixed utility costs and the remaining 14 percent are variable utility costs.

20. The Maximax, Maximin, & Equally Likely strategies are part of which of the following:

1. Decision making under risk
2. Decision making under certainty
3. Decision making under uncertainty
4. Both b and c
5. Both a and c

21. A decision tree is a diagram consisting of

   A. square decision nodes

         B. circle probability nodes

        C. branches representing decision alternatives/chance events

        D. all of the above

Answer 1

Solution-18:

y^=3056.58+1.27*x1

for x1=500 we get

y^=3056.58+1.27*500

y^= 3691.58

y^=3692

c.

$3,692

Solution-19:

Rsq=0.94

=0.94*100

=94%

94% variation in y is explained by x1

c.	94 percent of the variation in utility costs is explained by the increase or decrease in production.

Solution-20

The outcome of decision alternative is not known,and even its probability is not known.

there are several criterion for decisions making under certainty

(1) maximax(optimistic)

(2)maximin(pessimistic)

(3)criterion of realism(Hurwicz)

(4)Equally likely (Laplace)

(5)Minimax regret

1. Decision making under uncertainty

Solution-21:

21. A decision tree is a diagram consisting of

a decision tree is diagram consisting of decision nodes (represented as squares),probability nodes (circles) and decision alternatives(branches)

       D. all of the above