Question

Dohini Manufacturing Company, using 12 months of data on purchasing cost and number of purchase orders, ran a regression equation that yielded the following information on the intercept, X variable 1, and standard error.
Intercept .... 15,021
X variable 1 .... 9.74
Standard error .... 513.68
Dohini Manufacturing Company estimates that 430 purchase orders will be processed next month and wants to know the interval into which the actual value will fall with a 95 percent confidence level.
Required:
1. Determine the appropriate t-statistic value from Exhibit 3.14 for constructing Dohini Manufacturing Company’s confidence interval.
2. Dohini Manufacturing Company estimates that next month will have 430 purchase orders.
Construct a 95 percent confidence interval around the predicted value for materials handling cost.
3. What if Dohini Manufacturing wanted a 90 percent confidence level? Will the confidence interval be larger or smaller than the one calculated in Requirement 2? Construct a 90 percent confidence interval.


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  • CreatedSeptember 01, 2015
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