Yearly Maintenance Cost ($) Age (years) Yearly Maintenance Cost ($) Age (years) 4.5 619 5.0 1,194 4.5 1,049 0.5 163 4.5 1,033 0.5 182 4.0 495 6.0 764 4.0 723 6.0 1,373 4.0 681 1.0 978 5.0 890 1.0 466 5.0 1,522 1.0 549 5.5 987
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
The materials handling manager of a manufacturing com-
pany is trying to forecast the cost of maintenance for the
company’s fleet of over-the-road tractors. The manager be-
lieves that the cost of maintaining the tractors increases with
their age. The following data was collected:
a. Use POM for Windows’ least squares-linear regression
module to develop a relationship to forecast the yearly
maintenance cost based on the age of a tractor.
b. If a section has 20 three-year-old tractors, what is the fore-
cast for the annual maintenance cost?
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