1 The cost of a used car is highly correlated with the following variables:

(years)
(cubic centimeters)
(qualitative)
Using regression analysis, the following relationship between the cost of a car and the four independent variables was found:

purchase cost = a1 +
1 t b * V * aD 2 + Ab

a. Plot the purchase cost as a function of the four variables.

b. Which variable has the greatest effect on cost?

c. You have a total of $5,000. List the different types of cars (combinations of the parameters)
that you can afford.

d. Develop a model by which you select the best car for your needs.

e. Operations and maintenance costs for the car are estimated as follows:

annual maintenance cost = t 2 * V *
s 1,000 annual operating cost = aD * t +
V 1,000 b *
s 250 where s is the number of miles driven annually.What is the best car (combination of parameters) for a person who drives 12,000 miles every year?

Transcribed Image Text:

= age of the car V = volume of engine D = number of doors A = accessories and style 1 t 5 (years) 1,000 V 2,500 (cubic centimeters) D = 2,3,4,5 A = 1, 2, 3, 4, 5, 6 (qualitative)