The facility manager at a pharmaceutical company wants to build a regression model to forecast monthly electricity cost. Three main variables are thought to dictate electricity cost: (1) average outdoor temperature, (2) working days per month, (3) tons of product produced. A portion of the past year's monthly data is shown in the accompanying table.
Cost ($) Ave Temp (°F) Work Days Tons Produced
24100...................26....................24....................80
23700...................32....................21....................73
⋮...........................⋮.......................⋮.......................⋮
26000...................39....................22....................69
a. For each explanatory variable, discuss whether it is likely to have a positive or negative causal effect on monthly electricity cost.
b. Use Excel to estimate the regression model.
c. Are the signs of the regression coefficients as expected? If not, speculate as to why this could be the case.
d. What is the predicted electricity cost in a month during which the average outdoor temperature is 65°, there are 23 working days, and 76 tons are produced?