Question

Multiple regression was run on these data; the coefficients shown by the regression program are as follows:

Intercept$14,460
X variable1 8.92
X variable2 20.39

If Hydraulics Unlimited estimates that next month will have 430 total purchase orders and 45 nonstandard orders, what is the total estimated purchasing cost for that month?
1) $19,213
2) $4,753
3) $3,836
4) $918

Answer 1

The total estimated purchasing cost for Hydraulics Unlimited, given the regression coefficients and the estimated number of purchase orders, is calculated to be approximately $19,213.

Step-by-step explanation:

The objective is to calculate the total estimated purchasing cost for Hydraulics Unlimited given the coefficients from a multiple regression analysis and the estimated number of total and nonstandard orders for next month. The provided regression equation coefficients indicate an intercept, and coefficients for X variable1 and X variable2. Given estimates of 430 total purchase orders (X variable1) and 45 nonstandard orders (X variable2), one would calculate the total purchasing cost using the regression equation provided by the program:

Total Estimated Cost = Intercept + (Coefficient of X variable1 × X variable1) + (Coefficient of X variable2 × X variable2)

Calculating the total estimated cost:

Total Estimated Cost = $14,460 + (8.92 × 430) + (20.39 × 45)

Total Estimated Cost = $14,460 + $3,835.60 + $917.55

Total Estimated Cost = $19,213.15

Therefore, the total estimated purchasing cost for the given month would be approximately $19,213, hence the correct answer is option (1).