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Kelly Coughlin, owner of Flower Paradise, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee. Coughlin wants to set the delivery fee based on the distance driven to deliver the flowers. Coughlin wants to separate the fixed and variable portions of her van operating costs so that she has a better idea how delivery distance affects these costs. She has the following data from the past seven months (Click the icon to view the data) Read the requirements Requirement 1. Determine the company's cost equation (use the output from the Excel regression). (Round the amounts to two decimal places) y $ 0.26 x $ 1.028.28 Requirement 2. Determine the R-squared (use the output from the Excel regression) The R-squared is 0.746077 What does Flower Paradise's R-squared indicate? The R-squared indicates that the cost equation explains 74.6% of the variability in the data. In other words, it should be used with caution. Flower Paradise may or may not feel confident using this cost equation to predict total costs at other volumes within the same relevant range Requirement 3. Predict van operating costs at a volume of 14.500 miles assuming the company would use the cost equation from the Excel regression regardless of its R-squared. Should the company rely on this cost estimate? Why or why not? (Round your answer to the nearest cent) The operating costs at a volume of 14.500 miles is $ 4.798.28 - X Should the company rely on this cost estimate? Why or why not? Data table Since the R-squared is between 50 and 80 the company should use the cost equation with caution. Month Miles Driven Van Operating Costs January...... 16,500 $5,260 in February.... 18,500 $5,730 March 16.100 $4,960 April 17,100 $5,420 May. 17,500 $5,790 June ....... 15.000 $5,300 July......... 15,500 $5,040

Kelly Coughlin, owner of Flower Paradise, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee. Coughlin wants to set the delivery fee based on the distance driven to deliver the flowers. Coughlin wants to separate the fixed and variable portions of her van operating costs so that she has a better idea how delivery distance affects these costs. She has the following data from the past seven months (Click the icon to view the data) Read the requirements Requirement 1. Determine the company's cost equation (use the output from the Excel regression). (Round the amounts to two decimal places) y $ 0.26 x $ 1.028.28 Requirement 2. Determine the R-squared (use the output from the Excel regression) The R-squared is 0.746077 What does Flower Paradise's R-squared indicate? The R-squared indicates that the cost equation explains 74.6% of the variability in the data. In other words, it should be used with caution. Flower Paradise may or may not feel confident using this cost equation to predict total costs at other volumes within the same relevant range Requirement 3. Predict van operating costs at a volume of 14.500 miles assuming the company would use the cost equation from the Excel regression regardless of its R-squared. Should the company rely on this cost estimate? Why or why not? (Round your answer to the nearest cent) The operating costs at a volume of 14.500 miles is $ 4.798.28 - X Should the company rely on this cost estimate? Why or why not? Data table Since the R-squared is between 50 and 80 the company should use the cost equation with caution. Month Miles Driven Van Operating Costs January...... 16,500 $5,260 in February.... 18,500 $5,730 March 16.100 $4,960 April 17,100 $5,420 May. 17,500 $5,790 June ....... 15.000 $5,300 July......... 15,500 $5,040

Practical Management Science
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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Kelly Coughlin, owner of Flower Paradise, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Coughlin wants to set the delivery fee based on the distance driven to deliver the flowers. Coughlin wants to separate the fixed and variable portions of her van operating costs so that she has better idea how delivery distance affects these costs. She has the following data from the past seven months: (Click the icon to view the data.) Read the requirements. Requirement 1. Determine the company's cost equation (use the output from the Excel regression). (Round the amounts to two decimal places.) $ 0.26 x + $1,028.28 y = Requirement 2. Determine the R-squared (use the output from the Excel regression). The R-squared is 0.746077 What does Flower Paradise's R-squared indicate? The R-squared indicates that the cost equation explains 74.6% of the variability in the data. In other words, it should be used with caution. Flower Paradise may or may not feel confident using this cost equation to predict total costs at other volumes within the same relevant range. Requirement 3. Predict van operating costs at a volume of 14,500 miles assuming the company would use the cost equation from the Excel regression regardless of its R-squared. Should the company rely on this cost estimate? Why or why not? (Round your answer to the nearest cent.) The operating costs at a volume of 14,500 miles is $4,798.28 Should the company rely on this cost estimate? Why or why not? Since the R-squared is between .50 and .80, the company should use the cost equation with caution. Data table Month Miles Driven Van Operating Costs January.. 16,500 $5,260 February 18,500 $5,730 IT March 16.100 $4,960 April 17,100 $5,420 17,500 $5,790 15,800 $5,300 15,500 $5,040 May June July ... Print X Done (…)
Transcribed Image Text:Kelly Coughlin, owner of Flower Paradise, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Coughlin wants to set the delivery fee based on the distance driven to deliver the flowers. Coughlin wants to separate the fixed and variable portions of her van operating costs so that she has better idea how delivery distance affects these costs. She has the following data from the past seven months: (Click the icon to view the data.) Read the requirements. Requirement 1. Determine the company's cost equation (use the output from the Excel regression). (Round the amounts to two decimal places.) $ 0.26 x + $1,028.28 y = Requirement 2. Determine the R-squared (use the output from the Excel regression). The R-squared is 0.746077 What does Flower Paradise's R-squared indicate? The R-squared indicates that the cost equation explains 74.6% of the variability in the data. In other words, it should be used with caution. Flower Paradise may or may not feel confident using this cost equation to predict total costs at other volumes within the same relevant range. Requirement 3. Predict van operating costs at a volume of 14,500 miles assuming the company would use the cost equation from the Excel regression regardless of its R-squared. Should the company rely on this cost estimate? Why or why not? (Round your answer to the nearest cent.) The operating costs at a volume of 14,500 miles is $4,798.28 Should the company rely on this cost estimate? Why or why not? Since the R-squared is between .50 and .80, the company should use the cost equation with caution. Data table Month Miles Driven Van Operating Costs January.. 16,500 $5,260 February 18,500 $5,730 IT March 16.100 $4,960 April 17,100 $5,420 17,500 $5,790 15,800 $5,300 15,500 $5,040 May June July ... Print X Done (…)
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