ÃÂ Interpretation of Regression ResultsÃÂ Ross Enterprises maintains a Ã¯Â¬â eet of agricultural equipment for rental to local farmers. Ross maintains all its equipment in a company-owned facility. Data on maintenance costs and operating hours of the equipment have been collected for the past 24 months to help managers plan Ã¯Â¬Ânancial needs.ÃÂ ÃÂ Managers at Ross were initially excited about having the data and the analysis available for planning, but the initial regression results revealed the following equation:ÃÂ
Maintenance costs $10,564 – $67.13 X Operating hoursÃÂ ÃÂ ÃÂ The coefÃ¯Â¬Âcient on operating hours was highly signiÃ¯Â¬Âcant and the adjusted RÃÂ 2ÃÂ was 0.89.
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How would you explain a negative coefÃ¯Â¬Âcient; does it seem likely that the more the equipment is operated, the less the company spends on maintenance?ÃÂ ÃÂ