Quantitative Decision Making III – Assignment 2

Question 1 (5 points)

While creating multiple regression models, I noticed that there was a low level of correlation
with the dependent variable for the following categories: bore ratio, stroke, compression, car
height, and peak RPM. Even though wheelbase has a high r-squared value, it has
multicollinearity with car length, rendering it insignificant for price predictions. There is also
multicollinearity between curb weight and engine size. City MPG has a lower R-square than
highway MPG, so we should use highway MPG as the predictor. Therefore, the leftover
important predictors are highway MPG, engine size, car width, and horsepower. If you create a
regression model with all of these predictors, it shows that highway MPG has a high p-value.
Therefore, we should use the other three in our final regression model: horsepower, car width,
and engine size. This model will predict the car prices (y-variable) for 82.5% of the price.
Question 2 (4 points)

A) The standard deviation of the project length is 2.82 and the average length of the project
is 34.005 weeks.
B) According to my model, the estimated probability that the project will be completed in 35
weeks or less is 73.1%.