Cost per Thousand Gallons (Y) Thousands of Plant Gallons Sold (X) $ 1,015 1 416.9 2 973 472.5 1,046 250.0 4 1,006 372.1 1,058 238.1 6 1,068 258.6 7 967 597.0 997 414.0 9 1,044 263.2 10 1,008 372.0 Total $10,182 3,654.4 3. Co
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
Ohio Swiss Milk Products manufactures and distributes ice cream in Ohio, Kentucky, and West Virginia. The company wants to expand operations by locating another plant in northern Ohio. The size of the new plant will be a
the plant. A market survey is currently under way to determine that demand. Ohio Swiss wants to estimate the relationship between the
manufacturing cost per gallon and the number of gallons sold in a year to determine the demand for ice cream and, thus, the size of the new plant. The following data have been collected:
a. Develop a regression equation to forecast the cost per gallon as a function of the number of gallons produced.
b. What are the
c. Suppose that the market survey indicates a demand of 325,000 gallons in the Bucyrus, Ohio area. Estimate the manufacturing cost per gallon for a plant producing 325,000 gallons per year.
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