Final answer:
To develop the best linear cost estimation regression using OLS, follow these steps: draw a scatter plot, assess the relationship, calculate the least-squares line, and find the correlation coefficient.
Step-by-step explanation:
To develop the best linear cost estimation regression using OLS (Ordinary Least Squares), we need to follow these steps:
- Draw a scatter plot of the data with size as the independent variable and cost as the dependent variable.
- Assess whether there appears to be a relationship between the variables based on the scatter plot.
- Calculate the least-squares line by finding the equation in the form ŷ = a + bx.
- Find the correlation coefficient to determine if it is significant.
The slope of the least-squares line represents the rate of change in cost per unit change in size. Interpretation of the slope depends on the specific context of the data being analyzed.