Question
Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and
Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. During a discussion, one of the managers suggests that number of employees might be better at explaining cost than store revenues. As a result of that suggestion, managers collected the following information from last years operations (revenues and costs in thousands of dollars):
Store | Costs | Employees | Revenues |
101 | $1,700 | 24 | $5,393 |
102 | 3,709 | 41 | 4,689 |
103 | 3,219 | 26 | 2,793 |
104 | 5,089 | 54 | 6,192 |
105 | 4,393 | 44 | 5,649 |
106 | 2,782 | 26 | 5,147 |
107 | 1,825 | 34 | 5,923 |
108 | 4,760 | 45 | 4,025 |
109 | 6,075 | 47 | 2,639 |
110 | 4,364 | 29 | 4,599 |
111 | 3,869 | 42 | 4,897 |
112 | 6,318 | 58 | 2,412 |
113 | 2,380 | 28 | 3,820 |
114 | 4,583 | 36 | 2,317 |
115 | 2,754 | 26 | 2,926 |
d-1. Enter the regression coefficients.
d-2. Estimate the cost of a store with 42 employees using the results from a simple regression of store cost on employees.
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