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    Developing the Estimated Regression Line

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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 Expense
    13 17.0
    10 22.0
    20 30.0
    28 37.0
    32 47.0
    17 30.5
    24 32.5
    31 39.0
    40 51.5
    38 40.0

    a. Develop the estimated regression line.

    b. At ? = 0.05, test for the significance of the slope.

    c. Jensen expects to use the machine 30 hours per week, develop a 95% prediction interval for the company's annual maintenance expense.

    d. If the Maintenance contract is $3000 per year, would you recommend purchasing it? Why or why not?

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    2. 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 Expense
    13 17.0
    10 22.0
    20 30.0
    28 37.0
    32 47.0
    17 30.5
    24 32.5
    31 39.0
    40 51.5
    38 40.0
    a. Develop the estimated regression line.
    b. At ? = 0.05, test for the ...

    Solution Summary

    The solution assists in developing the estimated regression line.

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