A production company is studying the relationship between the average cost/unit and number of units produced in a batch. A sample of 10 batches is selected and the data is given below.
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No. of units produced Cost/unit 2037.7158 3535.0158 5030.8158 6525.8158 8020.0364 9516.9064 11016.3766 12013.8564 13513.9696 150 13.847a. Develop a scatter chart for these data. What does the scatter chart indicate about the relationship between average cost/unit and number of units produced?b. Regardless of your answer to part (a), develop an estimated simple linear regression equation for the data. How much variation in the sample values of cost/unit is explained by this regression model?
What will be an ideal response?
a. The scatter chart with number of units produced as the independent variable follows.
A simple linear regression model does not appear to be appropriate; there appears to be a nonlinear relationship between cost/unit and number of units produced in a batch.
b. The following Excel output provides the estimated simple linear regression equation that could be used to predict cost/unit (y) given the number of units produced in a batch (x).
The estimated multiple linear regression equation is 
, and the coefficient of determination for this model is r2 = 0.9177, so the regression model explains approximately 92% of the variation in the sample values of cost/unit.
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What will be an ideal response?
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