## GCON Final Exercises

You are involved in an analysis of the relationship between the cost of chemicals

used in a manufacturing process and the volume of production. You have

collected the following production usage data over the last five years and

adjusted it for the effects of inflation:

Table 3.8—Production Usage Data

Production Units Chemical Costs

4 $800

15 $1,200

20 $1,400

30 $1,800

50 $2,000

1. Estimate the cost to produce 26 units. (Hint: Use the regression template.)

2. Determine the coefficient of determination (r2).

3. Determine whether to use this analysis for estimating purposes.

* The cost is dependent on the

units produced. When using

the regression spreadsheet, be

sure to put the numbers in the

right columns for dependent

and independent variables!

In other words, is the r-squared

value above 80%, indicating a

reliable relationship between the

variables?

EXERCISE #2: JOHNSON IMAGING, INC.

You have obtained the following Johnson Imaging data related to MRI

production:

Table 3.9—Johnson Imaging Data

Model Display

(pixels)

Unit Cost

A 5,200 50,000

B 6,300 70,000

C 9,000 160,000

D 7,500 140,000

E 13,000 225,000

Assuming that pixel display is the independent variable and cost the

dependent variable, use the regression sheet to document the data.

1. What is your estimate of the cost of an MRI unit that displays a 12,500-pixel

image?

2. Determine the coefficient of determination (r2).

3. Determine whether to use this equation for estimating purposes. (yes/no)

EXERCISE #3: VOLUME CHEMICAL

You are involved in analyzing the relationship between the cost and the volume

of production. You have collected the following inflation‐adjusted data:

Table 3.12—Volume Chemical Inflation-Adjusted Data

Production Units Costs

700 $61,750

1,450 $64,450

1,500 $66,000

1,750 $69,438

2,100 $73,410

2,150 $75,720

3,050 $79,375

1. Estimate the cost to produce 2,000 units.

2. Determine the coefficient of determination (r2).

3. Determine whether to use this equation for estimating purposes. (yes/no