Week 11 workshop.docx

Week 11 workshop.docx - Week 11 presentation Model 1...

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Week 11 presentation Model 1 dependent variable and independent variable Model 2 cost is dependent variable and two independent variables Simple linear regression is a model that is able to measure and study two variables. By applying this model, we could make prediction for the dependent variable, strong or weak relationship Q1: Write the equation for model 1. Use the equation in for Model 1 to estimate overhead if 50 productions are worked. Model 1: overhead = dependent variable Production runs = independent variable Fixed costs = 52675.31 So, the equation is overhead costs = 52675.31+ 518.145 (production runs) When the production run is 50, then the overhead costs = 52675.31 + 518.145 * 50 = $78582.5588 Q2: If the actual cost is $91,000, is this business losing control given the t value is 2.04 for 28 degrees of freedom at 95% confidence? Confidence interval estimate for the slope coefficient of production runs, to decide whether the company is losing the control At 95% level of confidence, the confidence interval for the slope coefficient of the production is (154.01,882.29), which is from Coefficients (production) +/- (t value 2.04) * (Standard error). The coefficient of production is 154.01= 518.145 – (2.04 * 178.51), 882.29 = 518.145 + (2.04 * 178.51) Therefore, when the coefficient of production is 154.01 and 882.29, the equation should be - Overhead cost equation 1 = 52675.31 + 154.01 (production) - Overhead cost equation 2 = 52675.31 + 882.29 (production) When the production is 50, - Overhead cost equation 1 = 52675.31 + 154.01 * 50 = $60375.81 - Overhead cost equation 2 = 52675.31 + 882.29 * 50 = $96789.81 Then, the Confidence interval estimate for actual cost = (60375.81, 96789.81), the actual cost $91000 is in the range. Therefore, this business is not losing control and it is predictable. Note: if the range is too large, even though the actual cost is in the range, but it does not make any sense.
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Q3: Write the equation for model 2. What is the estimated overhead for 1800 machine hours are worked and 50 production runs?
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