WasteTec is a large construction company that specializes in the construction of large wastewater treatment plants and recycling plants. A major cost driver in either type of facility is the capacity of the plant. For example, the capacity of a recycling plant is measured by the number of tons of water per day (TPD) that the plant can process. These plants can vary in size from a few hundred TPD to as many as several thousand TPD. Regression analysis is a useful method to estimate the cost of a new plant by using a regression equation developed from prior plant construction projects. The dependent variable of the regression is the actual construction costs of each project, while the independent variable is the TPD for the plant. Below is a sample of some recent projects and the related construction costs (in thousands):

Required

1. Develop a regression model to predict the cost of a proposed new plant in Babylon, New York, which will have a required capacity of 750 TPD. What is the predicted cost for the Babylon plant?

2. Evaluate the precision and reliability of the regression you have developed. How could it be improved?

3. How would you incorporate sustainability issues in the analysis you have completed in requirements 1 and 2?

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TPD Costs $ 59,369 77,013 50,405 75,779 87,439 57,463 60,730 84,457 88,119 152,902 Commerce, CA 360 Hudson Falls, NY Layton, UT Oxford Township, NJ Savannah, GA 400 420 450 500 Poughkeepsie, NY Panama City, FL Ronkonkoma, NY Okahuma, FL Spokane, WA Arlington, VA Camden, NJ York, PA Bridgeport, CT Chester, PA 506 510 518 528 800 975 127,021 1,050 1,344 2,250 2,688 163,395 139,302 344,852 448,073