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Jensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine. Managers feel that maintenance expense should be related to usage, and they collected the following information on weekly usage (hours) and annual maintenance expense (in hundreds of dollars). Weekly Usage Annual (hours) Maintenance Expense 19 24 16 29 26 37 34 44 38 54 23 38 30 40 37 46 46 59 44 47 a. Develop the estimated regression equation that relates annual maintenance expense (in hundreds of dollars) to weekly usage hours (to 3 decimals). Expense = 12.887 + 0.930 Weekly Usage b. Test the significance of the relationship in part (a) at a 0.05 level of significance. Compute the value of the F test statistic (to 2 decimals). 50.57 The p value is less than 0.01 What is your conclusion? Conclude that there is a significant relationship between expense and weekly usage c. Jensen expects the new machine to be used 30 hours per week. What is the expected annual maintenance expense in hundreds of dollars (to 2 decimals)? 40.79 hundred

Jensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine. Managers feel that maintenance expense should be related to usage, and they collected the following information on weekly usage (hours) and annual maintenance expense (in hundreds of dollars). Weekly Usage Annual (hours) Maintenance Expense 19 24 16 29 26 37 34 44 38 54 23 38 30 40 37 46 46 59 44 47 a. Develop the estimated regression equation that relates annual maintenance expense (in hundreds of dollars) to weekly usage hours (to 3 decimals). Expense = 12.887 + 0.930 Weekly Usage b. Test the significance of the relationship in part (a) at a 0.05 level of significance. Compute the value of the F test statistic (to 2 decimals). 50.57 The p value is less than 0.01 What is your conclusion? Conclude that there is a significant relationship between expense and weekly usage c. Jensen expects the new machine to be used 30 hours per week. What is the expected annual maintenance expense in hundreds of dollars (to 2 decimals)? 40.79 hundred

Algebra and Trigonometry (MindTap Course List)
Algebra and Trigonometry (MindTap Course List)
4th Edition
ISBN:9781305071742
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter1: Equations And Graphs
Section1.FOM: Focus On Modeling: Fitting Lines To Data
Problem 10P
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Jensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine. Managers feel that maintenance expense should be related to usage, and they collected the following information on weekly usage (hours) and annual maintenance expense (in hundreds of dollars). Weekly Usage Annual (hours) Maintenance Expense 19 24 16 29 26 37 34 44 38 54 23 38 30 40 37 46 46 59 44 47 a. Develop the estimated regression equation that relates annual maintenance expense (in hundreds of dollars) to weekly usage hours (to 3 decimals). Expense 12.887 + 0.930 Weekly Usage b. Test the significance of the relationship in part (a) at a 0.05 level of significance. Compute the value of the F test statistic (to 2 decimals). 50.57 The p value is less than 0.01 What is your conclusion? Conclude that there is a significant relationship between expense and weekly usage c. Jensen expects the new machine to be used 30 hours per week. What is the expected annual maintenance expense in hundreds of dollars (to 2 decimals)? 2$ 40.79 hundred Develop a 95% prediction interval for the company's annual maintenance expense for this machine (to 2 decimals). ($ 31.05 hundred, $ 50.53 hundred ) d. If the maintenance contract costs $3000 per year, would you recommend purchasing the contract for the new machine in part (c)? Why or why not? No, the expected maintenance expense is less than $3000
Transcribed Image Text:Jensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine. Managers feel that maintenance expense should be related to usage, and they collected the following information on weekly usage (hours) and annual maintenance expense (in hundreds of dollars). Weekly Usage Annual (hours) Maintenance Expense 19 24 16 29 26 37 34 44 38 54 23 38 30 40 37 46 46 59 44 47 a. Develop the estimated regression equation that relates annual maintenance expense (in hundreds of dollars) to weekly usage hours (to 3 decimals). Expense 12.887 + 0.930 Weekly Usage b. Test the significance of the relationship in part (a) at a 0.05 level of significance. Compute the value of the F test statistic (to 2 decimals). 50.57 The p value is less than 0.01 What is your conclusion? Conclude that there is a significant relationship between expense and weekly usage c. Jensen expects the new machine to be used 30 hours per week. What is the expected annual maintenance expense in hundreds of dollars (to 2 decimals)? 2$ 40.79 hundred Develop a 95% prediction interval for the company's annual maintenance expense for this machine (to 2 decimals). ($ 31.05 hundred, $ 50.53 hundred ) d. If the maintenance contract costs $3000 per year, would you recommend purchasing the contract for the new machine in part (c)? Why or why not? No, the expected maintenance expense is less than $3000
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