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	24
12	29
22	37
30	44
34	54
19	38
26	40
33	46
42	59
40	47

A.) Develop the estimated regression equation that relates annual maintenance expense (in hundreds of dollars) to weekly usage hours (to 3 decimals).

Expense = [       ]    + [      ] weekly usage

B.) 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 [ less than .01, between .01 and .025, between .025 and .05, between .05 and .10, greater than .10. ]

C.) 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).

[       ] , [       ]

Answer 1

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