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