The Dayton Paper Company distributes paper products to custo

The Dayton Paper Company distributes paper products to customers across the country. Salespersons are required to visit customers on a weekly basis in order to generate business. The company, therefore, pays a fuel allowance to each salesperson based on the following model used to estimate miles driven developed using a sample of 12 observations:

EST MILES = -2.04 + 1.70 NO. CUSTOMERS + 19.04 NO. LOCATIONS + 0.45 NO. PRODUCTS

and STANDARD ERROR = 53.2385    ADJ R-SQ = 0.4288     SST = 54585.6667

The head of marketing has gathered new data based on the same number of observations and has developed the following model as an alternative to the original one:

EST MILES = 111.70 + 12.64 NO. CUSTOMERS + 26.62 NO. LOCATIONS – 14.68 NO. PRODUCTS

                                    -1.21 AGENT AGE +117.82 MARITAL STATUS

and MULT R = 0.8451             SST = 54585.6667

At the 0.05 level of significance, test to determine if the addition of the variables in the new model have a statistically significant effect on the model.

Solution

Sol)

Yes new model have a statistically significant effect on the model.

because compare to first model the second model R square value i very high. hence the new variables are statistically significant.