$3-48$ Regression Analysis

Study A ppendix $3.$ 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:

CHAPTER $3$

CHAPTER $3$ MEASUREMENT OF COST BEHAVIOR $115$

Sample Batch Size, X Support Costs, Y

$115$ $$180$

$212140$

$320230$

$417190$

$512160$

$625300$

$722270$

$89110$

$918240$

$1030320$

$1.$ 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.