Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine.

ensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine. Managers feel that maintenance expense should be related to usage, and they collected the following information on weekly usage (hours) and annual maintenance expense (in hundreds of dollars).

Weekly Usage (hours) Annual Maintenance Expense
13 17.0
10 22.0
20 30.0
28 37.0
32 47.0
17 30.5
24 32.5
31 39.0
40 51.5
38 40.0

(a) Develop the estimated regression equation that could be used to predict the annual maintenance expense (in hundreds of dollars) given the weekly usage (in hours). (Round your numerical values to two decimal places.)

= __________

(b) Test the significance of the relationship in part (a) at a 0.05 level of significance. (Use the F test.)

State the null and alternative hypotheses.

Find the value of the test statistic. (Round your answer to two decimal places.)

__________

Find the p-value. (Round your answer to three decimal places.)

p-value = __________

State your conclusion:

-Reject H0. We cannot conclude that the relationship between weekly usage (hours) and annual maintenance expense (in hundreds of dollars) is significant.

-Do not reject H0. We cannot conclude that the relationship between weekly usage (hours) and annual maintenance expense (in hundreds of dollars) is significant.

-Reject H0. We conclude that the relationship between weekly usage (hours) and annual maintenance expense (in hundreds of dollars) is significant.

-Do not reject H0. We conclude that the relationship between weekly usage (hours) and annual maintenance expense (in hundreds of dollars) is significant.

(d) If the maintenance contract costs $3,200 per year, would you recommend purchasing it? Why or why not? (Round your answer to two decimal places.)

The expected expense of a machine being used 30 hours per week is $ __________ hundred. Since this expected expense is [greater / less] than the cost of the maintenance contract, the maintenance contract [is not / is] advisable.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Elementary Number Theory

Authors: Underwood Dudley

1st Edition

0486134873, 9780486134871

More Books

Students also viewed these Mathematics questions