Given the pairs (time, price) (1,3), (2,5), (3,8) use linear regression to find the line ax+b that approximate these values. Use that line to calculate the price when the time is 4.

Operations Research : Applications and Algorithms
4th Edition
ISBN:9780534380588
Author:Wayne L. Winston
Publisher:Wayne L. Winston
Chapter24: Forecasting Models
Section24.8: Multiple Regression
Problem 6P
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Given the pairs (time, price) (1,3), (2,5), (3,8) use linear regression to find the line ax+b that approximate these values. Use that line to calculate the price when the time is 4.

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Step 1: Answer
  • Let’s say “x” and “y” are “2” variables and assume that “x” is a controlled variable and “y” is a dependent variable.
  • It is required to evaluate the value of “y”, when “x” is given.
  • The formula to produce the line is as follows,

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