Following are the results from two different simple regression analyses, estimating the costs of

the purchasing department using number of purchase orders and number of vendors as potential

cost drivers.

Required:

$($a$)$ Using the data above, describe three reasons why the number of purchase orders is a

better cost driver to use than the number of vendors. Write the corresponding cost

function.

$($b$)$ For the next month, the number of vendors is estimated to be $150,$ while the number of

purchase orders is estimated to be $340.$ Estimate the total cost for next month.

$($c$)$ Describe two limitations inherent in the use of regression analysis in this particular

situation. Be specific in your answer.