Question 317354: Your company has asked you to determine if there are any trends in the cost of operating the shipping department. You have put all the available information together for the past few years in the following table:
Year
1995
1997
1998
1999
2000
2001
Cost (in thousands $)
4.7
5.97
7.2
8.55
9.3
18.5
You notice that there is a good trend up until last year when operation costs jumped. Find the line of best fit both with and without the year 2001.
Which trend line seems to work better? Would you eliminate the data point for 2001 when reporting the results to your manager? Explain why or why not?
Answer by Fombitz(32388)   (Show Source):
You can put this solution on YOUR website! Without 2001,
xave=
yave=
SSXX=
SSYY=
SSXY=
b=
b'=
r^2=
a=
.
.
.
Graph that with the data points,
.
.
.
With 2001,
xave=
yave=
SSXX=
SSYY=
SSXY=
b=
b'=
r^2=
a=
.
.
.
Graph that with the data points over the previous graph,
.
.
.
Although the linear model captures up to 2000 well, you can't ignore 2001.
Perhaps a linear model is not the right model to use?
.
.
.
NOTE: The graph were scaled so that the years were 1,3,4,5,6,7 instead of 1995,1997,...,2001.
The equations work with  being the year and  being the cost.
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