# Question: Jensen Tire Auto is deciding whether to purchase a

Jensen Tire & Auto is deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine. Managers feel that maintenance expense should be related to usage, and they collected the following information on weekly usage (hours) and annual maintenance expense (in hundreds of dollars).

a. Develop a scatter chart with weekly usage hours as the independent variable. What does the scatter chart indicate about the relationship between weekly usage and annual maintenance expense?

b. Use the data to develop an estimated regression equation that could be used to predict the annual maintenance expense for a given number of hours of weekly usage. What is the estimated regression model?

c. Test whether each of the regression parameters β0 and β1 is equal to zero at a 0.05 level of significance. What are the correct interpretations of the estimated regression parameters? Are these interpretations reasonable?

d. How much of the variation in the sample values of annual maintenance expense does the model you estimated in part b explain?

e. If the maintenance contract costs $3,000 per year, would you recommend purchasing it? Why or why not’s?

a. Develop a scatter chart with weekly usage hours as the independent variable. What does the scatter chart indicate about the relationship between weekly usage and annual maintenance expense?

b. Use the data to develop an estimated regression equation that could be used to predict the annual maintenance expense for a given number of hours of weekly usage. What is the estimated regression model?

c. Test whether each of the regression parameters β0 and β1 is equal to zero at a 0.05 level of significance. What are the correct interpretations of the estimated regression parameters? Are these interpretations reasonable?

d. How much of the variation in the sample values of annual maintenance expense does the model you estimated in part b explain?

e. If the maintenance contract costs $3,000 per year, would you recommend purchasing it? Why or why not’s?

## Answer to relevant Questions

A sociologist was hired by a large city hospital to investigate the relationship between the number of unauthorized days that employees are absent per year and the distance (miles) between home and work for the employees. A ...1. Use methods of descriptive statistics to summarize the data. 2. Develop an estimated simple linear regression model that can be used to predict the alumni giving rate, given the graduation rate. Discuss your findings. 3. ...Ten weeks of data on the Commodity Futures Index are: 7.35 7.40 7.55 7.56 7.60 7.52 7. 52 7.70 7.62 7.55 a. Construct a time series plot. What type of pattern exists in the data? b. Use trial and error to find a value of the ...The quarterly sales data (number of copies sold) for a college textbook over the past three years follow: a. Construct a time series plot. What type of pattern exists in the data? b. Use a regression model with dummy ...Refer to the gasoline sales time series data in Table 5.1. a. Compute four-week and five-week moving averages for the time series. b. Compute the MSE for the four-week and five-week moving average forecasts. c. What appears ...Post your question