Connie Harris, in charge of office supplies at First Capital Mortgage Corp., would like to predict the quantity of paper used in the office photocopying machines per month. She believes that the number of loans originated in a month influence the volume of photocopying performed. She has compiled the following recent monthly data: Number of Loans Originated in Month Sheets of Photocopy Paper
used (1000s)
45 22
25 13
50 24
60 25
40 21
25 16
35 18
40 25
(a) Develop the least-squares estimated regression equation that relates sheets of photocopy paper used to loans originated.
(b) Use the regression equation developed in part (a) to forecast the amount of paper used in a month when 42 loan originations are expected.
(c) Compute the coefficient of determination r2. Comment on the goodness of fit.
(d) Compute the correlation coefficient.
(e) Is there a significant relationship between the two variables? Use a significance level of 0.05 and explain using numerical examples.