Study Appendix 3. Mr. Liao, CEO of a manufacturer of fine china and stoneware, is troubled by fluctuations in productivity and wants to compute how manufacturing support costs are related to the various sizes of batches of output. The following data show the results of a random sample of 10 batches of one pattern of stoneware:

1. Plot support costs, Y, versus batch size, X.

2. Using regression analysis, measure the cost function of support costs and batch size.

3. Predict the support costs for a batch size of 25.

4. Using the high-low method, repeat requirements 2 and 3. Should the manager use the high-low or regression method? Explain.

Transcribed Image Text:

Sample Batch Size, X 15 Support Costs, Y S180 12 140 3 20 230 4 17 190 5 12 160 6 25 300 7 22 270 8 9 110 9 18 240 10 30 320