Sundar Balakrishnan, the general manager of Precision Engineering Corporation (PEC), thinks that his firm’s engineering services contracted to highway construction firms are directly related to the volume of highway construction business contracted with companies in his geographic area. He wonders if this is really so, and if it is, can this information help him plan his operations better by forecasting the number of his engineering services required by construction firms in each quarter of the year? The following table presents the sales of his services and total amounts of contracts for highway construction over the past 8 quarters:
(a) Using this data, develop a regression equation for predicting the level of demand for Precision’s services.
(b) Determine the coefficient of correlation and the standard error of the estimate.