Question:

1. An operation research analyst is investigating the relationship between production lot size x and the average production cost per unit y.  A study of recent operations provides the following data:
   ------------------------------------------------------------------------------------------------------------
   x 100 120 140 160 180 200 220 240 260 280 300
   y $9.73 9.61 8.15 6.98 5.87 4.98 5.09 4.79 4.02 4.46 3.82
   ------------------------------------------------------------------------------------------------------------
   The analyst suspects that a piecewise linear regression model should be fit to these data.  Estimate the parameters in such a model assuming that the slope of the line changes at x=200 units.  Do the data support the use of this model?
2. Modify the model to investigate the possibility that a discontinuity exists in the regression function at x=200 units.  Estimate the parameters in this model.  Test appropriate hypotheses to determine if the regression function has a change in both the slope and the intercept at x=200 units.
3. Consider the polynomial model.  Find the variance inflation factors and comment on multicollinearity?

Price: $2.99

Solution: The downloadable solution consists of 5 pages
Deliverable: Word Document