Bicycling world, a magazine devoted to cycling, reviews hundreds of bicycles throughout the year.

Its Road-Race
category contains reviews of bicycles used by riders primarily interested in racing. One of the most important facto
in selecting a bicycle for racing is its weight. The following data show the weight (pounds) and price ($) for ten raci
bicycles reviewed by the magazine:

Model Weight (lbs) Price ($)

Fierro 7B 17.9 2200
HX 5000 16.2 6350
Durbin Ultralight 15 8470
Schmidt 16 6300
Wsilton Advanced 17.3 4100
Bicycle Velo 13.2 8700
Supremo Team 16.3 6100
XTC Racer 17.2 2680
D'Onoforio Pro 17.7 3500
Americana #6 14.2 8100

1. Develop a scatter chart with weight as the independent variable. What does the scatter chart indicate about the
2. Use the data to develop an estimated regression equation that could be used to estimate the price for a bicycle,
3. Test whether each of the regression parameters is equal to zero at 0.005 level of significance. What are the corre
4. How much of the variation in the prices of the bicycles in the sample does the regression model you estimated in
5. The manufacturers of the D'Onoforio Pro plan to introduce the 15-pound D'Onoforio Elite bicycle later this year.
throughout the year. Its Road-Race
ng. One of the most important factors
t (pounds) and price ($) for ten racing

the scatter chart indicate about the relationship between the weight and price of these bicycles?
to estimate the price for a bicycle, given its weight. What is the estimated regression model?
el of significance. What are the correct interpretations of the estimated regression paramters? Are these interpretations reason
e regression model you estimated in question #2? Explain
noforio Elite bicycle later this year. Use the regression model you estimated in question #1 to predict the price of the D'Ontorio
e these interpretations reasonable?

edict the price of the D'Ontorio Elite.

Model weight Price
Fierro 7B 17.9 2200 f(x) = − 1439.00643974241 x + 28818.0036798528
8200
HX 5000 16.2 6350 R² = 0.86372192024876

Durbin Ultralight 15 8470 7200

Schimidt 16 6300
6200
Wsilton Advanced 17.3 4100
Bicycle Velo 13.2 8700

Price
5200
Supremo Team 16.3 6100
4200
XTC Racer 17.2 2680
D'Onoforio Pro 17.7 3500 3200
Americana #6 14.2 8100
2200
14 14.5 15 15.5 16 16.5 17 17.5 18
Weight

1. In the scatter scart above, it displays a nagetive relationship because the coefficient relationship is -0.93

2. The estimated regression model is 0.86

3
74241 x + 28818.0036798528
76

Column C
Linear (Column C)

16 16.5 17 17.5 18
ht

onship is -0.93 -0.93 correlation

-1439.01 slope
28818.00 intercept
In a manufacturing process the assembly line speed (feet per minute) was thought to affect the
number of defective parts found during the inspection process. To test this theory, managers
devised a situation in which the same batch of parts was inspected visually at a variety of line
speeds. They collected the following data:

Line Speed (ftNumber of Defective Parts

20 21
20 19
40 15
30 16
60 14
40 17

1. Develop a scatter chart with line speed as the independent variable. What does the scatter chart indicate about t
2. Use the data to develop an estimated regression equation that could be used to predict the number of defective
3. Test whether each of the regression paramaters is equal to zero at 0.01 level of significance. What are the correc
4. How much of the variation in the number of defective parts found for the sample data does the model you estim
e scatter chart indicate about the relationship between line speed and the number of defective parts found?
edict the number of defective parts found, given the line speed. What is the estimated regression model?
nificance. What are the correct interpretations of the estimated regression parameters? Are these interpretations reasonable?
data does the model you estimated in question #2? Explain
arts found?

se interpretations reasonable?
Line Speed Number of Defective Parts
20 21
Chart Title
20 19
21
40 15
30 16 20

60 14 19 f(x) = − 0.147826086956522 x + 22.1739130434783

40 17 18
R² = 0.739130434782609

Axis Title
17

16

15

14
20 25 30 35 40 45 50 55
Axis Title

1. The scatter shart tells me that they have a negative relationship because the coefficient relationship is -0.86

2 The estimated regression equation is 0.74

 Chart Title
Column B
Linear (Column
B)

6086956522 x + 22.1739130434783
4782609

35 40 45 50 55 60
Axis Title

ent relationship is -0.86 -0.86 Correl

-0.15 Slope
22.17 Intercept
 Jensen Tire & Auto is deciding whether to purchase a maintenance contract for its new computer wheel
alignment and balancing machine. Managers feel that maintenance expenses 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 (hours) Annual Maintenance Expenses ($100s)

13 17
10 22
20 30
28 37
32 47
17 30.5
24 32.5
31 39
40 51.5
38 40

1. Develop a scatter chart with weekly usage hours as the independent variable. What does the scatter chart indica
2. Use the data to develop an estimated regression equation that could be used to predict the annual maintenance
3. Test whether each of the regression parameters is equal to zero at 0.05 level of significance. What are the correc
4. How much of the variation in the sample values of annual maintenance expense does the model you estimated i
5. If the maintenance contract costs $3,000 per year, would you recommend purchasing it? Why or why not?
 new computer wheel
ld be related to usage,
aintenance expense (in

at does the scatter chart indicate about the relationship between weekly usage and annual maintenance expense?
edict the annual maintenance expense for a given number of hours of weekly usage. What is the estimated regression model?
nificance. What are the correct interpretations of the estimated regression parameters? Are these interpretations reasonable?
oes the model you estimated in question #2? Explain
ing it? Why or why not?
enance expense?
estimated regression model?
se interpretations reasonable?
Weekly Hours Annual Maintenance Expenses
13 17
10 22 Chart Title
20 30 52
28 37 47 f(x) = 0.95344043969982 x + 10.5279568755945
32 47 R² = 0.85617674884271
42
17 30.5 37
24 32.5

AME
32
31 39 27
40 51.5
22
38 40
17
10 15 20 25 30 35
Weekly Hours

1. On the scatter chart above, it says that it has a positive relationship because it has a coefficient relationship of 0.

2. The estimated regression model is 0.86

 Chart Title

95344043969982 x + 10.5279568755945
5617674884271

Column B
Linear (Column B)

20 25 30 35 40
Weekly Hours

a coefficient relationship of 0.93 0.93 Correl

0.95 Slope
10.53 Intercept
Market Weekly Gross Revenue ($100s) Television Advertising
Mobile 101.3 5.0
Shreveport 51.9 3.0
Jackson 74.8 4.0
Birmingham 126.2 4.3
Little Rock 137.8 3.6
Biloxi 101.4 3.5
New Orleans 237.8 5.0
Baton Rouge 219.6 6.9

1. Develop an estimated regression equation with the amount of television advertising as the independent variable. Te
significant relationship between television advertising and weekly gross revenue at the 0.05 level of significance. Wh
interpretation of this relationship?

2. How much of the variation in the sample values of weekly gross revenue does the model in #1? Explain

3. Develop an estimated regression equation with both television advertising and newspaper advertising as the inde
variables. Test whether each of the regression parameters is equal to zero at a 0.05 level of significance. What are th
interpretations of the estimated regression parameters? Are these interpretations reasonable?

4. How much of the variation in the sample values of weekly gross revenue does the model in #3 explain?

5. What are the managerial implications of these results

 Newspaper Advertising
1.5
3.0
1.5
4.3
4.0
2.3
8.4
5.8

as the independent variable. Test for a

e 0.05 level of significance. What is the

the model in #1? Explain

wspaper advertising as the independent

evel of significance. What are the correct
asonable?

model in #3 explain?
Market Weekly Gross Revenue Television Advertising Newspaper Advertising
Mobile 101.3 5 1.5 7
Shreveport 51.9 3 3 6.5
Jackson 74.8 4 1.5 6
Birmingham 126.2 4.3 4.3
5.5 f(x) =
Little Rock 137.8 3.6 4

Televesion
R² = 0
5
Biloxi 101.4 3.5 2.3
New Orleans 237.8 5 8.4 4.5

Baton Rouge 219.6 6.9 5.8 4

3.5

3
51 71

1. There is a positive relationship between WGR and Television Advertising because the coefficient relationship is 0.
It is the same between television and newspaper because it has a coefficient relationship of 0.42
 7 9

6.5 8

6 7

5.5 f(x) = 0.0138574660633484 x + 2.59232183257919 6

f(x) = 0.905794525417703 x − 0.14681834340

Newspaper
Televesion

R² = 0.555185362722846 R² = 0.222490146281907
5 5

4.5 Column C 4
Linear (Column C)
4 3

3.5 2

3 1
51 71 91 111 131 151 171 191 211 3 3.5 4 4.5 5 5.5 6 6.5
WGR Television

fficient relationship is 0.75 correl 0.75 correl

slope 0.01 slope
intercept 2.59 intercept
0.905794525417703 x − 0.146818343405617
.222490146281907

Column D
Linear (Column D)

4 4.5 5 5.5 6 6.5 7

Television

0.47
0.91
-0.15
 Overall
Satisfaction
Satisfaction Satisfaction
with Speed
Brokerage with Trade
of
with
Price Electronic
Execution
Trades
Scottrade, Inc. 3.4 3.4 3.5
Charles Schwab 3.2 3.3 3.4
Fidelity Brokerage Services 3.1 3.4 3.9
TD Ameritrade 2.9 3.6 3.7
E*Trade Financial 2.9 3.2 2.9
(Not listed) 2.5 3.2 2.7
Vanguard Brokerage Services 2.6 3.8 2.8
USAA Brokerage Services 2.4 3.8 3.6
Thinkorswim 2.6 2.6 2.6
Wells Fargo Investments 2.3 2.7 2.3
Interactive Brokers 3.7 4.0 4.0
Zecco.com 2.5 2.5 2.5
Firstrade Securities 3.0 3.0 4.0
Banc of America Investment Services 4.0 1.0 2.0

1. Develop an estimated regression equation using trade price and speed of execution to predict overall satisfaction w

2. Use the t test to determine the significance of each independent variable. What are your conclusions at the 0.05 lev

3. Interpret the estimated regression parameters. Are the relationships indicated by these estimates what you woul

4. Finger Lakes Investments has developed a new electronic trading system and would like to predict overall custom

5. What concerns (if any) do you have with regard to the possible responses the respondents could select on the sur
t overall satisfaction with the broker. Interpret the coefficient of determination.

clusions at the 0.05 level of significance?

timates what you would expect?

predict overall customer satisfaction assuming they can provide satisfactory service levels (3) for both trade price and speed of

could select on the survey.

both trade price and speed of execution. Use the estimated regression equation developed in #1 to predict overall satisfaction
to predict overall satisfaction level for Finger Lakes Investments if they can achieve these performance levels.
Brokerage SWTP SWSOE OSWET
3.4 3.4 3.5 Chart Title
3.2 3.3 3.4 4
3.1 3.4 3.9
3.5
2.9 3.6 3.7 f(x) = − 0.391211146838156 x
3
2.9 3.2 2.9 R² = 0.0682758289164805

SWSOE
2.5 3.2 2.7 2.5
2.6 3.8 2.8 2
2.4 3.8 3.6
1.5
2.6 2.6 2.6
1
2.3 2.7 2.3
2 2.2 2.4 2.6 2.8 3 3.2 3.4 3.6
3.7 4 4
SWTP
2.5 2.5 2.5
3 3 4
4 1 2

1. The estimated regression is 0.07

 Chart Title

f(x) = − 0.391211146838156 x + 4.2556270096463

R² = 0.0682758289164805

Column C
Linear (Column C)

2.4 2.6 2.8 3 3.2 3.4 3.6 3.8 4

SWTP

correl -0.26
slope -0.39
intercept 4.26