17/08/2010 ESGC6123/ 2114: STATISTICAL DATA ANALYSIS

TUTORIAL Exercise
1. The Bendrix Company manufactures various types of parts for automobiles. The
manager of the factory wants to get a better understanding of the overhead costs include
supervision, indirect labor, supplies, payroll taxes, overtime premiums, depreciation, and
a number of miscellaneous items such a insurance, utilities, and janitorial and
maintenance expenses. Some of these overhead costs are fixed! in the sense that they
do not vary appreciably with the volume of wor" being done, whereas others are
variable! and do vary directly with the volume of wor". The fixed overhead costs tend to
come from the supervision, depreciation, and miscellaneous categories, whereas the
variable overhead costs tend to come from the indirect labor, supplies, payroll taxes, and
overtimes premiums categories. #owever, it is not easy to draw a clear line between the
fixed and variable overhead components.
The Bendrix manager has trac"ed total overhead costs over the past $% months. To
help explain! these, he has also collected data on two variables that are related to the
amount of wor" done at the factory. These variables are&
'ach#rs& number of machine hours used during the month
(rod)uns& the number of separate production runs during the month
i* The manager believes both of these variables might be responsible +in
different ways* for variations in overhead costs. ,o scatter-plots support this
belief.
ii* The Bendrix manufacturing data set has two potential explanatory variables,
'arch#rs and (rod)uns. /ventually, we will estimate a regression e0uation
with both of these variables included. #owever, if we include only one at a
time, what do they tell us about overhead costs.

+$* )egression 1nalysis +,ata& 2(32'1T.,1T*
The director of 2raduate Studies at a large college of business would li"e to be able to
predict the grade-point index +2(3* of students in an 'B1 program based upon 2raduate
'anagement 1ptitude Test +2'1T* score. 1 sample of 45 students who had completed
two years in the program was selected.
a* Set up scatter diagram
b* 1ssuming linear relationship, use the least s0uares method to find the regression
e0uation
c* 3nterpret the meaning of 6 intercept and the slope of the regression line in this
problem.
d* 7se the regression model developed in +b* to predict the 2(3 for a student with 2'1T
of %55.
e* 8hat is the value of )-s0uare. 3nterpret its meaning in this problem.
f* Compute the coefficient of correlation r and interpret its meaning.
g* 1t the 5.59 level of significance, is there evidence of a relationship between 2'1T
score and 2(3.
h* (erform a residual analysis on you results and determine the ade0uacy of the fit of
the model.
i* (erform an influence analysis and determine whether any observations should be
deleted from the model. 3f necessary, reanaly:e the regression model after deleting
these observations and compare your results to the original model.