Holding goods in inventory is costly because inventoried goods are susceptible to breakage and other forms of physical damage. Typically, the amount of damage increases with the level of inventory, but some of the damage is unrelated to the amount of inventory. In addition, the seasonality may make a difference. A random sample of 10 observations is selected with the variables INVTRY (X1, inventory in $1,000,000s), SEASON (X2, with spring and summer being 0 and fall and winter being 1), and DAMAGE (Y, in $10,000s). The results are found below.
INVTRY SEASON DAMAGE
11 1 80
15 1 100
13 0 70
10 1 60
7 0 50
9 0 70
13 1 100
10 0 65
14 1 95
8 0 54
15 0 96
9 1 91
13 1 85
a. Perform the multiple regression t-tests on, (use two tailed test with (? = .10). Interpret your results.
b. Predict the damage for a single case in the spring or summer with an inventory of $12,000,000. Use both a point estimate and the appropriate interval estimate.