In the packaging department of a large aircraft parts distributor, a fairly reliable estimate of packaging and processing costs can be determined by knowing the weight of an order. Thus the weight is a cost driver that accounts for a sizable fraction of the packaging and processing costs at this company. Data for the past 10 orders are given as follows: Packaging and Processing Costs ($), Y 97 109 88 86 123 114 112 102 107 86 Weight (Pounds), X 230 280 210 190 320 300 280 260 270 190 (A) Estimate the bo and b₁ coefficients, and determine the linear regression equation to fit these data. (B) What is the correlation coefficient (R) and what is the Pearson correlation coefficient (R²)? (C) If an order weighs 250 lbs, how much would it cost to package and process it?
In the packaging department of a large aircraft parts distributor, a fairly reliable estimate of packaging and processing costs can be determined by knowing the weight of an order. Thus the weight is a cost driver that accounts for a sizable fraction of the packaging and processing costs at this company. Data for the past 10 orders are given as follows: Packaging and Processing Costs ($), Y 97 109 88 86 123 114 112 102 107 86 Weight (Pounds), X 230 280 210 190 320 300 280 260 270 190 (A) Estimate the bo and b₁ coefficients, and determine the linear regression equation to fit these data. (B) What is the correlation coefficient (R) and what is the Pearson correlation coefficient (R²)? (C) If an order weighs 250 lbs, how much would it cost to package and process it?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Transcribed Image Text:In the packaging department of a large aircraft parts distributor, a fairly reliable estimate of packaging
and processing costs can be determined by knowing the weight of an order. Thus the weight is a cost
driver that accounts for a sizable fraction of the packaging and processing costs at this company. Data
for the past 10 orders are given as follows:
Packaging and Processing Costs ($), Y
97
109
88
86
123
114
112
102
107
86
Weight (Pounds), X
230
280
210
190
320
300
280
260
270
190
(A) Estimate the bo and b₁ coefficients, and determine the linear regression equation to fit these data.
(B) What is the correlation coefficient (R) and what is the Pearson correlation coefficient (R²)?
(C) If an order weighs 250 lbs, how much would it cost to package and process it?
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Step 1: Part (a) -Describe Linear regression (least squares regression)
VIEWStep 2: Part (a)-Find slope and intercept for the forecast line
VIEWStep 3: Part (a)-Determine Regression line
VIEWStep 4: Part (b)-Find Correlation coefficient , r
VIEWStep 5: Part (b)-Find co-efficient of determination
VIEWStep 6: Part (c)-Find cost
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