Jensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computerized wheel alignment and balancing machine. Managers feel that maintenance expense is related to usage of the machine, and they have collected the following information on weekly usage of the machine (in hours) and annual maintenance expense (in hundreds of dollars) from 10 other companies that own the machine.

Company     Weekly Usage(hours)     Annual maintenance Expense(hundreds of dollars)
A                         13                                                     17.0
B                         10                                                     22.0
C                         20                                                     30.0
D                         28                                                     37.0
E                         32                                                     47.0
F                         17                                                     30.5
G                         24                                                     32.5
H                         31                                                      39
I                          40                                                      51.5
J                          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.)

ŷ=____________________.

b)

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

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.)

____________________.

State your conclusion.

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

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

(c)

Jensen expects to use the new machine 34 hours per week. Develop a 95% prediction interval for the company's annual maintenance expense (in hundreds of dollars). (Round your answers to two decimal places.)

$______________ hundred to $____________________ hundred.

(d)

If the maintenance contract costs $3,400 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 34 hours per week is $_______________ hundred. Since this expected expense is________________ than the cost of the maintenance contract, the maintenance contract___________ advisable.

Question

Jensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computerized wheel alignment and balancing machine. Managers feel that maintenance expense is related to usage of the machine, and they have collected the following information on weekly usage of the machine (in hours) and annual maintenance expense (in hundreds of dollars) from 10 other companies that own the machine.

Company     Weekly Usage(hours)     Annual maintenance Expense(hundreds of dollars)
A                         13                                                     17.0
B                         10                                                     22.0
C                         20                                                     30.0
D                         28                                                     37.0
E                         32                                                     47.0
F                         17                                                     30.5
G                         24                                                     32.5
H                         31                                                      39
I                          40                                                      51.5
J                          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.)

ŷ=____________________.

b)

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

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.)

____________________.

State your conclusion.

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

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

(c)

Jensen expects to use the new machine 34 hours per week. Develop a 95% prediction interval for the company's annual maintenance expense (in hundreds of dollars). (Round your answers to two decimal places.)

$______________ hundred to $____________________ hundred.

(d)

If the maintenance contract costs $3,400 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 34 hours per week is $_______________ hundred. Since this expected expense is________________ than the cost of the maintenance contract, the maintenance contract___________ advisable.

Accepted Answer

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