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Drum Costs - Solution

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Case 1: Drum Costs

© Jostein Lillestøl NHH, Bergen

Drum Costs - Solution

A plot of Costs versus Weight with fitted (regression) line is given below.

The fitted linear relation formula is

Cost = 1000 + 441.6 · Weight

Since the fit is extremely (and unexpectedly) good it may be well suited to judge incoming bids on new drums with known weight obtained from specification. The pair (Weight, Cost) may be plotted in the diagram, and a point sufficiently above the line may correspond to a inferior price offer, unless some specific reason for the high price is found.

100 80

60 40

20 0

50000

40000

30000

20000

10000

0

Weight

Cost

S 918,863

R-Sq 99,8%

R-Sq(adj) 99,8%

Fitted Line Plot Cost = 1000 + 441,6 Weight

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