Terry Downes lost his job as an operations analyst last year in a company downsizing effort. In looking for job opportunities, Terry remembered reading an article in Fortune stating companies were looking to outsource activities they were currently doing that were not part of their core competence. Terry decided no company’s core competence involved cleaning its facilities, and so using his savings, he started a cleaning company. In a surprise to his friends, Terry’s company proved to be successful. Recently, Terry decided to survey customers to determine how satisfied they are with the work performed. He devised a rating scale between 0 and 100, with 0 being poor and 100 being excellent service. He selected a random sample of 14 customers and asked them to rate the service. He also recorded the number of worker hours spent in the customer’s facility. These data are in the data file named Downes.
a. (1) Draw a scatter plot showing these two variables, with the y variable on the vertical axis and the x variable on the horizontal axis. (2) Describe the relationship between these two variables.
b. (1) Develop a linear regression model to explain the variation in the service rating. (2) Write a short report describing the model and showing the results of pertinent hypothesis tests, using a significance level of 0.10.