When trying to decide what car to buy, real value is not necessarily determined by how much you spend on the initial purchase. Instead, cars that are reliable and don’t cost much to own often represent the best values. But, no matter how reliable or inexpensive a car may cost to own, it must also perform well. To measure value, Consumer Reports developed a statistic referred to as a value score. The value score is based upon five-year owner costs, overall road-test scores, and predicted reliability ratings. Five-year owner costs are based on the expenses incurred in the first five years of ownership, including depreciation, fuel, maintenance and repairs, and so on. Using a national average of 12,000 miles per year, an average cost per mile driven is used as the measure of five-year owner costs. Road-test scores are the results of more than 50 tests and evaluations and are based upon a 100-point scale, with higher scores indicating better performance, comfort, convenience, and fuel economy. The highest road-test score obtained in the tests conducted by Consumer Reports was a 99 for a Lexus LS 460L. Predicted-reliability ratings (1=Poor, 2 = Fair, 3 =Good, 4= Very Good, and 5 =Excellent) are based on data from Consumer Reports’ Annual Auto Survey.   A car with a value score of 1.0 is considered to be “average-value.” A car with a value score of 2.0 is considered to be twice as good a value as a car with a value score of 1.0; a car with a value score of 0.5 is considered half as good as average; and so on. The data for 20 family sedans, including the price ($) of each car tested, follow. picture is attached   Managerial Report 1. Develop numerical summaries of the data. 2. Use regression analysis to develop an estimated regression equation that could be used to predict the value score given the price of the car. 3. Use regression analysis to develop an estimated regression equation that could be used to predict the value score given the five-year owner costs (cost/mile). 4. Use regression analysis to develop an estimated regression equation that could be used to predict the value score given the road-test score. 5. Use regression analysis to develop an estimated regression equation that could be used to predict the value score given the predicted-reliability. 6. What conclusions can you derive from your analysis?

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When trying to decide what car to buy, real value is not necessarily determined by how much you spend on the initial purchase. Instead, cars that are reliable and don’t cost much to own often represent the best values. But, no matter how reliable or inexpensive a car may cost to own, it must also perform well. To measure value, Consumer Reports developed a statistic referred to as a value score. The value score is based upon five-year owner costs, overall road-test scores, and predicted reliability ratings. Five-year owner costs are based on the expenses incurred in the first five years of ownership, including depreciation, fuel, maintenance and repairs, and so on. Using a national average of 12,000 miles per year, an average cost per mile driven is used as the measure of five-year owner costs. Road-test scores are the results of more than 50 tests and evaluations and are based upon a 100-point scale, with higher scores indicating better performance, comfort, convenience, and fuel economy. The highest road-test score obtained in the tests conducted by Consumer Reports was a 99 for a Lexus LS 460L. Predicted-reliability ratings (1=Poor, 2 = Fair, 3 =Good, 4= Very Good, and 5 =Excellent) are based on data from Consumer Reports’ Annual Auto Survey.

 

A car with a value score of 1.0 is considered to be “average-value.” A car with a value score of 2.0 is considered to be twice as good a value as a car with a value score of 1.0; a car with a value score of 0.5 is considered half as good as average; and so on. The data for 20 family sedans, including the price ($) of each car tested, follow.

picture is attached

 

Managerial Report
1. Develop numerical summaries of the data.
2. Use regression analysis to develop an estimated regression equation that could be
used to predict the value score given the price of the car.
3. Use regression analysis to develop an estimated regression equation that could be
used to predict the value score given the five-year owner costs (cost/mile).
4. Use regression analysis to develop an estimated regression equation that could be
used to predict the value score given the road-test score.
5. Use regression analysis to develop an estimated regression equation that could be
used to predict the value score given the predicted-reliability.
6. What conclusions can you derive from your analysis?

Road-
Test
Predicted
Value
Car
Price (S)
Cost/Mile
Score Reliability
Score
Nissan Altima 2.5 $ (4-cyl.)
Kia Optima LX (2.4)
Subaru Legacy 2.5i Premium
Ford Fusion Hybrid
Honda Accord LX-P (4-cyl.)
Mazda6 i Sport (4-cyl.)
Hyundai Sonata GLS (2.4)
Ford Fusion SE (4-cyl.)
Chevrolet Malibu LT (4-cyl.)
Kia Optima SX (2.0T)
Ford Fusion SEL (V6)
Nissan Altima 3.5 SR (V6)
Hyundai Sonata Limited (2.0T)
Honda Accord EX-L (V6)
Mazda6 s Grand Touring (V6)
Ford Fusion SEL (V6, AWD)
Subaru Legacy 3.6R Limited
Chevrolet Malibu LTZ (V6)
Chrysler 200 Limited (V6)
Chevrolet Impala LT (3.6)
1.75
23,970
21,885
23,830
32,360
0.59
91
4
0.58
81
4
1.73
0.59
0.63
0.56
1.73
1.70
83
4
84
5
23,730
22,035
21,800
23,625
24,115
29,050
28,400
30,335
28,090
28,695
30,790
30,055
30,094
80
4
1.62
0.58
73
4
1.60
1.58
1.55
0.56
89
3
0.57
76
4
0.57
74
3
1.48
0.72
84
4
1.43
0.67
80
4
1.42
0.69
93
4
1.42
0.66
89
3
1.39
1.36
1.34
0.67
90
3
0.74
81
4
0.71
75
4
1.32
0.71
88
3
1.29
28,045
27,825
28,995
0.67
83
3
1.20
0.70
52
5
1.20
0.67
63
3
1.05
Transcribed Image Text:Road- Test Predicted Value Car Price (S) Cost/Mile Score Reliability Score Nissan Altima 2.5 $ (4-cyl.) Kia Optima LX (2.4) Subaru Legacy 2.5i Premium Ford Fusion Hybrid Honda Accord LX-P (4-cyl.) Mazda6 i Sport (4-cyl.) Hyundai Sonata GLS (2.4) Ford Fusion SE (4-cyl.) Chevrolet Malibu LT (4-cyl.) Kia Optima SX (2.0T) Ford Fusion SEL (V6) Nissan Altima 3.5 SR (V6) Hyundai Sonata Limited (2.0T) Honda Accord EX-L (V6) Mazda6 s Grand Touring (V6) Ford Fusion SEL (V6, AWD) Subaru Legacy 3.6R Limited Chevrolet Malibu LTZ (V6) Chrysler 200 Limited (V6) Chevrolet Impala LT (3.6) 1.75 23,970 21,885 23,830 32,360 0.59 91 4 0.58 81 4 1.73 0.59 0.63 0.56 1.73 1.70 83 4 84 5 23,730 22,035 21,800 23,625 24,115 29,050 28,400 30,335 28,090 28,695 30,790 30,055 30,094 80 4 1.62 0.58 73 4 1.60 1.58 1.55 0.56 89 3 0.57 76 4 0.57 74 3 1.48 0.72 84 4 1.43 0.67 80 4 1.42 0.69 93 4 1.42 0.66 89 3 1.39 1.36 1.34 0.67 90 3 0.74 81 4 0.71 75 4 1.32 0.71 88 3 1.29 28,045 27,825 28,995 0.67 83 3 1.20 0.70 52 5 1.20 0.67 63 3 1.05
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