STAT 378 Homework Assignment 3 Answer key (100pts total)

Problem adapted from text. The cost of adding a new communication node at a
location not currently included in the network is of concern to a major
manufacturing company. To try to predict the price of new communication nodes,
data were obtain on a random sample of existing nodes. We have information on
the following variables:

y: Installation cost of the node, in U.S. dollars (COST)

x 1: Number of ports available for access (NUMPORTS)
x 2: Bandwidth (BANDWIDTH)
x 3: Port speed (PORTSPEED)

The MINITAB dataset, called nodes.mtw, can be found on Blackboard. Use MINITAB
to answer the following questions.

1. (5pts) Report the estimated multiple linear regression equation using

appropriate notation.
^y =17487−14168 x 1+81.4 x2 +1524 x 3

2. (10pts) Interpret the estimate of β 0 within the context of the problem.

The installation cost with zero number of port, zero band width with zero
speed is expected to be $17487. However, this may not be an appropriate
interpretation-- zero band width, zero speed, and zero number of port would
not cause any cost.

3. (10pts) Interpret the estimate of β 2 within the context of the problem.

Keeping number of ports and port speed constant, for a 1 increase in

bandwidth, the predicted (expected) installation cost will increases by $81.4.

4. (5pts) Report the 95% CI for β 2.

¿ ( 31.5 ,131.3 )

5. (10pts) Based on the CI reported above, is bandwidth linearly related to

installation cost (after taking into account the effect of number of ports and
port speed)? Explain your answer.

1
 Yes, bandwidth is linearly related to installation cost after accounting for
number of ports and port speed because 0 is not contained in the 95%
confidence interval for the regression coefficient associated with bandwidth.

6. (10pts) Conduct a global F-test for the overall fit of the multiple regression
model at the 5% significance level by completing the follow steps:
a. State the hypotheses
H A : β 1=β 2=β 3=0 H A :at least one β j ≠ 0 for j=1,2,3

b. Provide the value of the test statistic

65.85

c. Provide the p-value

p-value ≈ 0

d. State your decision

Reject H_0, since p-value is less than .05
e. State your conclusion
We have found a significant evidence that there is at least one
explanatory variable that will help explain the response, cost.

7. (15pts) Perform a hypothesis test at the 0.05 significance level to determine

if there is a significant linear relationship between the number of ports and
the installation cost after accounting for bandwidth and port speed. Do this
by completing the following steps:
a. State the null and alternative hypotheses
H 0 : β1 =0 H A : β1≠ 0

b. Provide the value of the test statistic

T=-0.52

c. Provide the p-value

p-value=.615

d. State your decision

Fail to reject H_0; p-value >.05

e. State your conclusion

2
 We have not found a significant evidence that the number of ports is
linearly related to the cost even after accounting for bandwidth and
port speed.

8. (10pts) What percentage of the variation in installation cost has been

explained by the full multiple linear regression model?
95.18%

9. (25pts) Looking at the p-values for the individual t-tests for each variable in
the full model, it appears that only bandwidth is statistically significant with
all other variables in the model. Can we remove both number of ports and
port speed? To answer this question, we wish to perform a partial F-test
comparing the following models:

Full population model: μY ∨x =β 0 + β 1 x 1 + β 2 x 2 + β 3 x 3

Reduced model: μY ∨x =β 0 + β 2 x 2

a. State the null and alternative hypotheses

H 0 : β j=0 for j=1,3

H A : β 1 ≠ 0 or β 3 ≠ 0 (i.e. at least one β j ≠ 0 for j=1,3)

b. Provide the value of the test statistic

( SSE R −SSE F ) / ( k−g ) (533993530−95108054)/(2)

F= = =23.073
SSE F / ( n−k−1 ) 9510805

c. Provide the p-value

=.000189
d. State your decision
Reject the null
e. State your conclusion
We have found a significant evidence that at least one of
number of ports and port speed is linearly related to the
response, cost, even after accounting for bandwidth. i.e.
reduced model is not adequate.