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Activity 5.3 Solving Regression Problems: Group Work

Problem 2: Develop a linear regression model to predict assessed house value based on heating area using sample data of value and area for 15 houses. The model finds coefficients b0 and b1 that best fit a linear relationship. It is then used to predict the value for a house with

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MonicaLiezel Mendoza
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124 views2 pages

Activity 5.3 Solving Regression Problems: Group Work

Problem 2: Develop a linear regression model to predict assessed house value based on heating area using sample data of value and area for 15 houses. The model finds coefficients b0 and b1 that best fit a linear relationship. It is then used to predict the value for a house with

Uploaded by

MonicaLiezel Mendoza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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ACTIVITY 5.

3 SOLVING REGRESSION PROBLEMS


Group Work
Solve the following problems as required. Coordinate with your group mates in solving the problems.

Problem
1. Management of soft-drink bottling companies wants to develop a method for allocating delivery costs
to customers. Although one cost clearly relates to travel time with a particular route, another variable
cost reflects the time required to unload the cases of soft drinks at the delivery point. A sample of 20
deliveries within a territory was selected. The delivery time and the number of cases delivered were
recorded.

Delivery Delivery
Number of Number of
Customer Time Customer Time
Cases Cases
(Minutes) (Minutes)
1 52 32.1 11 161 43.0
2 64 34.8 12 184 49.4
3 73 36.2 13 202 57.2
4 85 37.8 14 218 56.8
5 95 37.8 15 243 60.6
6 103 39.7 16 254 61.2
7 116 38.5 17 267 58.2
8 121 41.9 18 275 63.1
9 143 44.2 19 287 65.6
10 157 47.1 20 298 67.3

Develop a regression model to predict delivery time based on the number of cases delivered.
a. Assuming a linear relationship use the least-squares method to compute the regression
coefficients b0 and b1.
b. Plot a scatterplot diagram and interpret the meaning of b0 and b1 in this problem.
c. Predict the delivery time for 150 and 300 cases of soft drinks.
d. Would it be appropriate to use the model to predict the delivery time for a customer who is
receiving 500 cases of soft drink? Why?

2. You want to develop a model to predict the assessed value of houses based on the heating area. A
sample of 15 single-family houses is selected in the city. The assessed value (in thousand dollars) and
the heating area of the houses (in thousands of square feet) are recorded with the following results.

Heating Area of Dwelling


House Assessed Value ($000)
(Thousands of Square Feet)
1 84.4 2.00
2 77.4 1.71
3 75.7 1.45
4 85.9 1.76
5 79.1 1.93
6 70.4 1.20
7 75.8 1.55
8 85.9 1.93
9 78.5 1.59
10 79.2 1.50
11 86.7 1.90
12 79.3 1.39
13 74.5 1.54
14 83.8 1.89
15 78.8 1.59

a. Assuming a linear relationship, use the least-squares method to compute the regression
coefficients b0 and b1.
b. Plot a scatterplot diagram and interpret the meaning of Y-intercept b0 and the slope b1 in this
problem.
c. Use the prediction line developed in (a) to predict the assessed value for a house whose heating
area is 1,750 and square feet.

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