A company produces electric motors for use in home appliances. One of the company’s production managers is interested in examining the relationship between the dollars spent per month in inspecting finished motor products (X) and the number of motors produced during that month that were returned by dissatisfied customers (Y). He has collected the data in the file P10_03.xlsx to explore this relationship for the past 36 months.
a. Estimate a simple linear regression equation using the given data and interpret it. What does the ANOVA table indicate for this model?
b. Examine the residuals of the regression equation. Do you see evidence of any violations of the regression assumptions?
c. Conduct a Durbin–Watson test on the model’s residuals. Interpret the result of this test.
d. In light of your result in part c, do you recommend modifying the original regression model? If so, how would you revise it?