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Regression Analysis

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1. The manager of Erehwon police department motor pool wants to develop a forecast model for annual maintenance costs on police cars, based on mileage in the past year, and age of cars. The following data have been collected for eight different cars:

Miles Driven Car Age (yr.) Maintenance Cost ($)

16,320 7 1,200
15,100 8 1,400
18,500 8 1,820
10,200 3 900
9,175 3 650
12,770 7 1,150
8,600 2 875
7,900 3 900

a. Using Excel,develop a multiple regression equation for these data.
b. What is the coefficient of determination? What does it mean?
c. Forecast the annual maintenance cost for a police car that is 5 years old and will be driven 10,000 miles in 1 year.

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Solution Summary

This solution is comprised of a detailed explanation of various aspects of Regression Analysis as it pertains to the given problem. Supplemented with EXCEL output, this step-by-step explanation of this complicated topic provides students with a clear perspective of Regression Analysis.