Question: The relationship between total operating cost and quantity produced (in a manufacturing company) is given by the linear regression model TC = 5,000 + 500Q,

The relationship between total operating cost and quantity produced (in a manufacturing company) is given by the linear regression model TC = 5,000 + 500Q, where TC = total operating cost (in shs ) per annum and Q = quantity produced per annum (kg).

Required

What reservations might you have about relying on the above model for decision-making purposes? (10 marks)

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