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Scatter diagram and regression equation

Draw a scatter diagram. Determine the regression equation.

Earth Engineering is in the process of trying to locate office space to accommodate employee growth. Over the last five years, the office has grown from 25 to 54 employees. Within less than a two-year period, the office has had to move to two new buildings - one was for additional growth to accommodate staff from 25 to 50 employees. However, the lease space developed mold due to a leaking roof that caused several employees to get sick. Therefore, within less than a year, the office had to relocate to a new space (the current space) with no mold. The current office lease expires at the end of 2007 so management is looking for a new space. Current lease term for 10,000 sq. ft. is 5 years, $25k/mo. If management chooses to renew the lease, the rent will increase to $35k/mo.

Management has visited many office locations within the 78746 zip code and surrounding area. Based on the existing office location, the southwest area of Austin serves as a key location for the engineering industry and downtown Austin; therefore, the office would prefer to remain in the same area. In presenting the preferred alternate space options to corporate managers, a random sampling of available space in the area was compiled.

Office Address Square Ft.
(in thousands) Monthly lease
(in thousands)
2705 Bee Cave Rd 10 25
5121 Bee Cave Rd 15 20
100 Congress Center 15 35
7000 N. MoPac Expy. 15 25
1613 Capitol of Texas Hwy 15 30

Based on the information provided, which office location is the best option.

Draw a scatter diagram
Determine the regression equation


Solution Summary

This posting contains solution to following regression analysis problem using scatter diagram. The expert draws a scatter diagram and determines the regression equation.