Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers...
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Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. During a discussion, one of the managers suggests that number of employees might be better at explaining cost than store revenues. As a result of that suggestion, managers collected the following information from last years operations (revenues and costs in thousands of dollars):
Store
Costs
Employees
Revenues
101
$1,700
24
$5,393
102
3,709
41
4,689
103
3,219
26
2,793
104
5,089
54
6,192
105
4,393
44
5,649
106
2,782
26
5,147
107
1,825
34
5,923
108
4,760
45
4,025
109
6,075
47
2,639
110
4,364
29
4,599
111
3,869
42
4,897
112
6,318
58
2,412
113
2,380
28
3,820
114
4,583
36
2,317
115
2,754
26
2,926
d-1. Enter the regression coefficients.
d-2. Estimate the cost of a store with 42 employees using the results from a simple regression of store cost on employees.
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