Aspin Inc. is working to estimate Purchasing Costs more accurately. Two cost drivers $($number of

suppliers and number of parts per product$)$ have been identified to evaluate Purchasing Costs. The most

recent regressions results for each cost driver are as follows:

Suppliers:

Number of parts:

a$.$ What specifically does the $r^2$ measure in regression analysis?

b$.$ Which cost driver above $($suppliers or parts$)$ is the better cost driver and provide four reasons why

this is the better cost driver.

c$.$ Using the cost driver you identified in letter b$.$ above, provide the cost function and estimate

Purchasing Costs for the given Estimated Usage.

d$.$ Give an example of how more accurate cost estimation supports better decisions in an organization.