A mail-order catalog business maintains a warehouse for distribution of products ordered. Management is currently investigating what factors affect distribution costs. Data has been collected for the past 24 months indicating warehouse distribution costs, sales, numbers of orders and average order processing time.

1. Perform regression analysis to determine how the three variables affect distribution costs. Show the final model and the work needed to reach this result. Use Alpha = .01

2. Interpret the coefficients of the variables in the final model.

3. Would you use this model? Why or why not?

4. Given: Sales = $475,000, number of orders = 4000, average processing time = 25 minutes, calculate predicted distribution costs.

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# of Orders Distribution Costs (S000) Sales (S000) Month Average Order Processing Times (min) 52.95 386 4015 18.6 2 71.66 446 3806 28.5 3 85.58 512 5309 33.9 63.69 401 4262 26.1 72.81 457 4296 28.9 6. 68.44 458 4097 22.5 52.46 301 17.5 3213 4809 25.6 70.77 484 82.03 517 5237 30.9 10 74.39 503 4732 28.3 70.84 535 28.4 11 4413 2912 12 54.08 353 14.9 13 62.98 372 3977 16.5 14 72.3 328 4428 25.5 3964 15 58.99 408 16.5 491 16 79.38 4582 28.1 94.44 5582 17 527 32.8 18 59.74 444 3450 19.6 19 90.5 623 5079 37.5 20 93.24 596 5735 36.8 21 69.33 463 4269 25.7 22 53.71 389 3708 17.8 23 89.18 547 5387 29.2 24 66.8 415 4161 25.5 Sales ($000) 700 600 500 400 300 Sales (S000) 200 -Linear (Sales (S000)) 100 20 40 60 80 100 .... ....