Management of a soft drink bottling company has the business objective of developing a
method for allocating delivery costs to customers. Although one cost clearly relates to travel
time within a particular route, another variable cost reflects the time required to unload the
cases of soft drink at the delivery point. To begin, management decided to develop a regression
model to predict delivery time based on the number of cases delivered. A sample of 7 deliveries
within a territory was selected. The delivery times and the number of cases delivered were
organized in the following table:
Customer No. of Cases Delivery
1 14 24
2 16 31
3 17 28
4 19 30
5 11 20
6 16 22
7 24 40
a) Use the least-squares method to compute the regression coefficients.
b) Write down the estimated equation and interpret the meaning of the coefficients in this
c) Predict the mean delivery time for 26 cases of soft drink.
d) Determine the value of the extent of relationship between delivery time and number of
cases and interpret your result.
e) Determine the coefficient of determination and explain its meaning in this problem.
f) What variation in delivery time is not attributed to the number of cases
g) At the 5% significance level, determine whether there a correlation between delivery
time and number of cases.