The managers in the region are interested in opening a new store with expected area of 51,000 square feet. Assuming the data and cost estimates from the current stores are appropriate for the new store (SE-18), what are the estimated store costs for store SE-18 using the results from this regression? Note: Do not round your Intermediate calculations. Enter your answer in thousands of dollars rounded to 2 decimal places. Store cost
The managers in the region are interested in opening a new store with expected area of 51,000 square feet. Assuming the data and cost estimates from the current stores are appropriate for the new store (SE-18), what are the estimated store costs for store SE-18 using the results from this regression? Note: Do not round your Intermediate calculations. Enter your answer in thousands of dollars rounded to 2 decimal places. Store cost
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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Waveney DIY Centers (WDC) operates a few dozen stores in the eastern United States. The stores are popular with home
remodelers, contractors, and do-it-yourself customers. The managers at Waveney are interested in understanding what
drives costs as well as getting better cost estimates when planning new stores. The area manager for the Southeast
Region is interested in new data analysis approaches to management and offered to run a test using data from the 14
stores in the region.
The initial thoughts of the managers and the financial analysts in the region were that two primary factors drove store
costs: store area (square footage) and revenue. The following data were collected from the most recent year of operations
(revenues and costs in thousands of dollars).
Store
SE-01
SE-02
SE-03
SE-04
SE-05
SE-06
SE-07
SE-08
SE-09
SE-10
SE-11
SE-12
SE-13
SE-14
Revenues
($800)
$ 20,745
15,682
25,921
Store cost
19,589
19,866
17,956
24,705
12,901
23,281
16,030
20,558
17,320
13,874
23,104
Area
(Square Feet)
69,347
51,617
83,531
67,574
58,709
67,574
95,948
46,298
78,212
62,255
65,801
72,893
62,255
74,666
Costs
($000)
$ 15,999
12,695
19,410
15,279
15,312
14,299
18,891
10,947
17,653
13,064
15,833
13,997
11,770
17,494
Results from a regression of store costs on store area are as follows.
Equation:
Store costs = $3,125.82 (in thousands) + ($0.184 × Area)
Statistical data
Correlation coefficient
R²
Required:
The managers in the region are interested in opening a new store with expected area of 51,000 square feet. Assuming the data and
cost estimates from the current stores are appropriate for the new store (SE-18), what are the estimated store costs for store SE-18
using the results from this regression?
Note: Do not round your Intermediate calculations. Enter your answer in thousands of dollars rounded to 2 decimal places.
0.863
0.745](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb5f8cd3a-a188-4673-9a12-9fc9562ff39a%2F4a7f008b-70d7-4df5-90e7-14ff1366f103%2F0zrshhua_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required Information
[The following information applies to the questions displayed below.]
Waveney DIY Centers (WDC) operates a few dozen stores in the eastern United States. The stores are popular with home
remodelers, contractors, and do-it-yourself customers. The managers at Waveney are interested in understanding what
drives costs as well as getting better cost estimates when planning new stores. The area manager for the Southeast
Region is interested in new data analysis approaches to management and offered to run a test using data from the 14
stores in the region.
The initial thoughts of the managers and the financial analysts in the region were that two primary factors drove store
costs: store area (square footage) and revenue. The following data were collected from the most recent year of operations
(revenues and costs in thousands of dollars).
Store
SE-01
SE-02
SE-03
SE-04
SE-05
SE-06
SE-07
SE-08
SE-09
SE-10
SE-11
SE-12
SE-13
SE-14
Revenues
($800)
$ 20,745
15,682
25,921
Store cost
19,589
19,866
17,956
24,705
12,901
23,281
16,030
20,558
17,320
13,874
23,104
Area
(Square Feet)
69,347
51,617
83,531
67,574
58,709
67,574
95,948
46,298
78,212
62,255
65,801
72,893
62,255
74,666
Costs
($000)
$ 15,999
12,695
19,410
15,279
15,312
14,299
18,891
10,947
17,653
13,064
15,833
13,997
11,770
17,494
Results from a regression of store costs on store area are as follows.
Equation:
Store costs = $3,125.82 (in thousands) + ($0.184 × Area)
Statistical data
Correlation coefficient
R²
Required:
The managers in the region are interested in opening a new store with expected area of 51,000 square feet. Assuming the data and
cost estimates from the current stores are appropriate for the new store (SE-18), what are the estimated store costs for store SE-18
using the results from this regression?
Note: Do not round your Intermediate calculations. Enter your answer in thousands of dollars rounded to 2 decimal places.
0.863
0.745
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