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SOLUTIONS
1. REPR MINICASE
a. Plot indicates that, as units go up, the service times tends to increase.
160
140
120
TIME
100
80
60
40
20
0 2 4 6 8 10
UNITS
1
c. F = 338.59 > 5.32 (F value with 1 and 9 DF at a level of significance of 5%).
Hence we reject the null hypothesis H0 : 1 =0 in favor of H1 : 1 0.
Alternatively, the p value for this value of F = 338.59 is 0.000%, which is less
than 5%. Hence the results are statistically significant. The standard error of
estimate is 8 minutes and the value of r2 = 0.977 or 97.7%. This implies that the
average error in estimating the service time from this regression equation is plus
or minus 8 minutes. Furthermore, 97.7% of the variation in service time is
explained by the variation in the number of units.
d.
2.0
1.5
Standardized Residual
1.0
0.5
0.0
-0.5
-1.0
0 2 4 6 8 10
UNITS
The residuals appear to have a random pattern. The linear regression model
adequately explains the service times, because the results are statistically
significant and the residuals are random.
2
e. Y = 5.57 + 15.34 X, where X= Units and Y = Time. When X= 6,
Y = 97.6 minutes. Se = 8 minutes. Therefore a 95% prediction interval for the time
required to complete a 6- unit job is:
This implies that 95% of all jobs will have a service time between 79 and 116
minutes.
Y = 389 minutes.
This prediction may not be accurate because of extrapolation. The linear model
with a slope of 15.34 may not hold for large numbers of units.
3
2. KEYNES MINICASE
.1. SOURCE DF SS MS F
Regression 1 58.748 58.748 40.54
Residual Error 7 10.143 1.449
Total 8 68.891
H0 : 1= 0
H1 : 1 0
Since F > F.05 (1,7) [ 40.54 > 5.59 ] , we accept the alternate
hypothesis and conclude that a linear relationship exists.
3. R2 = SSR/SST = 0.853
Therefore R = 0.853 = 0.923.
6. The residual plot is not random. It looks like the relationship is curvilinear. It
seems that the per capita spending has leveled off when the income level
exceeds 3. See plot of Per Capita Spending (Y) versus Average Disposal
Income levels (X) and the residual plot on the next page.
4
Fitted Line Plot
Y = 4.563 + 1.847 X
15.0 S 1.20375
R-Sq 85.3%
Y = Per Capita Household Spending
R-Sq(adj) 83.2%
12.5
10.0
7.5
5.0
0 1 2 3 4 5
X = Average Disposal Income Level
Residuals Versus X
(response is Y)
1.0
0.5
Standardized Residual
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
0 1 2 3 4 5
X