MATLAB: An Introduction with Applications
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ISBN: 9781119256830
Author: Amos Gilat
Publisher: John Wiley & Sons Inc
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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
($000)
$ 21,245
16, 182
26,421
20,089
20,366
18,456
25,205
13,401
23,781
16,530
21, 058
17,820
14,374
23,604
Area
(Square Feet)
Store cost
69,847
52,117
84,031
68,074
59,209
68,074
96,448
46,798
78,712
62, 755
66,301
73,393
62,755
75, 166
Costs
($000)
$16,499
13,195
19,910
15,779
15,812
14,799
19,391
11,447
18,153
13,564
16,333
14,497
12,270
17,994
Results from a regression of store costs on revenues are as follows.
Equation:
Store costs = $2,941.22 (in thousands) + (71.6 % × Revenue)
Statistical data
Correlation coefficient
0.999
0.998
R²
Required:
The managers in the region are interested in opening a new store with expected revenues of $22.5 million. Assuming the data and
cost estimates from the current stores are appropriate for the new store (SE-17), what are the estimated store costs for store SE-17
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.](https://content.bartleby.com/qna-images/question/fb099cd5-593f-478c-8f3a-c7e347055560/e54e70be-76aa-4eaa-99dc-2e9b8805fc92/3r2qmbh_processed.jpeg)
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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
($000)
$ 21,245
16, 182
26,421
20,089
20,366
18,456
25,205
13,401
23,781
16,530
21, 058
17,820
14,374
23,604
Area
(Square Feet)
Store cost
69,847
52,117
84,031
68,074
59,209
68,074
96,448
46,798
78,712
62, 755
66,301
73,393
62,755
75, 166
Costs
($000)
$16,499
13,195
19,910
15,779
15,812
14,799
19,391
11,447
18,153
13,564
16,333
14,497
12,270
17,994
Results from a regression of store costs on revenues are as follows.
Equation:
Store costs = $2,941.22 (in thousands) + (71.6 % × Revenue)
Statistical data
Correlation coefficient
0.999
0.998
R²
Required:
The managers in the region are interested in opening a new store with expected revenues of $22.5 million. Assuming the data and
cost estimates from the current stores are appropriate for the new store (SE-17), what are the estimated store costs for store SE-17
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.
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