Package Cost of Shipment Package Weight Distance Shipped

1 $3.30 4.10 95
2 $2.00 0.30 160
3 $11.00 5.10 240
22. A regional express
4 $2.60 5.90 47 investigate the relatio
5 $1.90 4.50 53 package weight (X1), a
6 $8.00 3.50 250
7 $15.50 7.00 260
randomly selected fro
8 $5.00 2.40 209 detailed analysis of th
9 $1.00 0.60 100 sample observations
10 $4.40 0.75 280 a. Estimate a simple l
11 $6.00 6.20 115
12 $1.70 1.10 90
package weight. Inter
13 $14.50 6.50 240 the R2 value.
14 $14.00 7.50 190 b. Add another explan
15 $9.20 6.60 160 in part a. Estimate an
16 $1.10 2.70 45
17 $12.10 8.10 160
for this multiple regre
18 $1.50 0.70 80 equation in part a? Ex
19 $8.00 4.40 202 the adjusted R2 value
20 $3.90 3.20 145
A regional express delivery service company recently conducted a study to
stigate the relationship between the cost of shipping a package (Y), the
kage weight (X1), and the distance shipped (X2). Twenty packages were
domly selected from among the large number received for shipment, and a
ailed analysis of the shipping cost was conducted for each package. These
ple observations are given in the file P10_22.xlsx.
stimate a simple linear regression equation involving shipping cost and
kage weight. Interpret the slope coefficient of the least squares line and
R2 value.
dd another explanatory variable, distance shipped, to the regression model
art a. Estimate and interpret this expanded equation. How does the R2 value
his multiple regression equation compare to that of the simple regression
ation in part a? Explain any difference between the two R2 values. Interpret
adjusted R2 value for the revised equation.
d a study to
e (Y), the
es were
ment, and a
age. These

ost and
line and

ession model
s the R2 value
regression
es. Interpret
 StatTools (Core Analysis Pack)
Analysis: Scatterplot
Performed By: Chris Albright
Date: Sunday, June 06, 2010
Updating: Live

Scatterplot of Cost of Shipment vs Package Weight of Data Set #1

18

16

14
Cost of Shipment / Data Set #1

12

10

0
0 1 2 3 4 5 6 7 8 9
Package Weight / Data Set #1

Correlation 0.774

Scatterplot of Cost of Shipment vs Distance Shipped of Data Set #1

18

16

14
Cost of Shipment / Data Set #1

12

10

0
0 50 100 150 200 250 300
Distance Shipped / Data Set #1

Correlation 0.695
 StatTools (Core Analysis Pack)
Analysis: Regression
Performed By: Chris Albright
Date: Sunday, June 06, 2010
Updating: Static

Multiple Adjusted StErr of

R-Square
Summary R R-Square Estimate
0.7736 0.5985 0.5761 3.176

Degrees of Sum of Mean of

F-Ratio p-Value
ANOVA Table Freedom Squares Squares
Explained 1 270.55294534 270.55294534 26.8269 < 0.0001
Unexplained 18 181.53255466 10.085141926

Standard Confidence Interval 95%

Coefficient t-Value p-Value
Regression Table Error Lower Upper
Constant 0.276 1.3684448509 0.2018 0.8423 -2.5988313396 3.1511605567
Package Weight 1.493 0.2883005688 5.1795 < 0.0001 0.8875464538 2.0989404921

Parta:
Part a: As
As the
the package
packageweight
weight increases
increases by byone
one
pound, the
pound, the cost
cost of
of shipping
shipping the
thepackage
packageincreases
increases byby
$1.49 on
$1.49 onaverage.
average.This
This simple
simple linear
linear regression
regression
model explains
model explains almost
almost60% 60% of
of the
the total
total variation
variation in
in
the cost
the costofof shipment.
shipment.
 StatTools (Core Analysis Pack)
Analysis: Regression
Performed By: Chris Albright
Date: Sunday, June 06, 2010
Updating: Static

Multiple Adjusted StErr of

R-Square
Summary R R-Square Estimate
0.9572 0.9162 0.9063 1.493

Degrees of Sum of Mean of

F-Ratio p-Value
ANOVA Table Freedom Squares Squares
Explained 2 414.18440812 207.09220406 92.8883 < 0.0001
Unexplained 17 37.901091878 2.2294759929

Standard Confidence Interval 95%

Coefficient t-Value p-Value
Regression Table Error Lower Upper
Constant -4.673 0.8911470754 -5.2435 < 0.0001 -6.5529126062 -2.7926006427
Package Weight 1.292 0.1378419046 9.3761 < 0.0001 1.0015929303 1.5832349255
Distance Shipped 0.037 0.0046017261 8.0264 < 0.0001 0.0272267215 0.0466443084

Part b:
Part b: Now,
Now, holding
holdingall
all else
else constant,
constant, the
thecost
cost of
ofshipping
shipping aa package
package rises
rises by
by
$1.29 when
$1.29 when the
the package
package weight
weightincreases
increases by
by one
one pound.
pound. Furthermore,
Furthermore, holding
holding
all else
all else constant,
constant, the
the cost
costof of shipping
shipping aa package
package rises
rises by
by approximately
approximately$0.04
$0.04
whenthe
when thethe
the distance
distance shipped
shipped increases
increasesbybyone
one mile.
mile.

Both the
Both the R-squared
R-squared and and adjusted
adjusted R-squared
R-squared values
values have
have increased
increasedconsiderably
considerably
with the addition of the second explanatory variable; this multiple
with the addition of the second explanatory variable; this multiple regression regression
model fits
model fits the
the given
given data
data better
better than
than did
did the
the simple
simple linear
linear model
model fromfrom part
parta.a.
Note that
Note thatthe
the R-squared
R-squared and
and adjusted
adjustedR-squared
R-squared values
values are
arequite
quitesimilar
similar here.
here.
Both explanatory
Both explanatory variables
variables are
are adding
adding toto the
the explanation
explanationof of the
the variation
variation in
in the
the
cost of shipment.
cost of shipment.