Question

A manufacturer produces custom metal blanks that are used by its customers for computer- aided machining. The customer sends a design via computer, and the manufacturer comes up with an estimated cost per unit, which is then used to determine a price for the customer. The data for the analysis were sampled from the accounting records of 195 orders filled during the previous three months. Formulate the regression model with y as the average dollar cost per unit and x1 as the material cost per unit and x2 as the labor hours per unit.
(a) Examine scatterplots of the response versus the two explanatory variables as well as the scatterplot between the explanatory variables. Do you notice any unusual features in the data? Do the relevant plots appear straight enough for multiple regression?
(b) Fit the indicated multiple regression and show a summary of the estimated features of the model.
(c) Does the estimated model appear to meet the conditions for the use of the MRM?
(d) Has the addition of labor hours per unit resulted in a model that explains statistically significantly more variation in the average cost per unit?
(e) Interpret the estimated slope for labor hours. Include in your answer the 95% confidence interval for the estimate.
(f) Does this model promise accurate predictions of the cost to fill orders based on the material cost and labor hours?


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  • CreatedJuly 14, 2015
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