A mail-order catalog business selling personal computer supplies, software, and hardware maintains a centralized warehouse. Management is currently examining the process of distribution from the warehouse. The business problem facing management relates to the factors that affect warehouse distribution costs. Currently, a small handling fee is added to each order, regardless of the amount of the order. Data collected over the past 24 months (stored in WareCost) indicate the warehouse distribution costs (in thousands of dollars), the sales (in thousands of dollars), and the number of orders received.
a. State the multiple regression equation.
b. Interpret the meaning of the slopes, b1 and b2, in this problem.
c. Explain why the regression coefficient, b0, has no practical meaning in the context of this problem.
d. Predict the monthly warehouse distribution cost when sales are $400,000 and the number of orders is 4,500.
e. Construct a 95% confidence interval estimate for the mean monthly warehouse distribution cost when sales are $400,000 and the number of orders is 4,500.
f. Construct a 95% prediction interval for the monthly warehouse distribution cost for a particular month when sales are $400,000 and the number of orders is 4,500.
g. Explain why the interval in (e) is narrower than the interval in (f).