Mrs. Cole's Bakery bakes and distributes bread throughout central Indiana. The company wants to expand operations by

Question:

Mrs. Cole's Bakery bakes and distributes bread throughout central Indiana. The company wants to expand operations by locating another plant in Ohio. The size of the new plant will be a function of the expected demand for baked goods within the area served by the plant. The company wants to estimate the relationship between the manufacturing cost per loaf and the number of loaves sold in a year to determine the demand for bread and, thus, the size of the new plant. The following data have been collected:

a. Develop a regression equation to forecast the cost per loaf as a function of the number of loaves produced.
b. What are the correlation coefficient and the coefficient of determination?
c. Comment on your regression equation in light of these measures.
d. Estimate the manufacturing cost per loaf for a plant producing 160,000 loaves per year.