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    Pearson's Correlation Coefficient and Regression Equation

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    The following table represents data involving direct labour costs (in Rands) and the batch size (in units) produced by a small manufacturing concern that specialises in a single product.

    BATCH SIZE (units) LABOUR COSTS (Rands)
    15 200
    18 240
    21 290
    23 300
    26 380
    28 370
    32 400

    1. Determine Pearson's correlation coefficient and comment on the value obtained.

    2. Obtain a regression equation representing the above data.

    3. Estimate the production batch size for a direct labour cost of R350-00.

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    Solution Summary

    This solution determines Pearson's correlation coefficient and regression equation from an ANOVA analysis. It also uses the regression equation to estimate the product batch size for a specific direct labour cost.