Quality control programs employ many tools for problem definition and analysis. A scatter diagram is one of these tools. The objective of a scatter diagram is to:
Answer(s): A
The objective of a scatter diagram is to depict degrees of correlation. Each observation is represented by a dot on a graph corresponding to specific values of x (the independent variable) and y (the dependent variable).
A regression equation:
Regression analysis is used to find an equation for the linear relationship among variables. The behavior of the dependent variable is explained in terms of one or more independent variables. Regression analysis is often used to estimate a dependent variable (such as cost) given a known independent variable (such as production).
An internal auditor for a large automotive parts retailer wishes to perform a risk analysis and wants to use an appropriate statistical tool to help identify stores that would be out of line compared to the majority of stores. The most appropriate statistical tool to use is:
Answer(s): B
Time series data pertain to a given entity over a number of prior time periods. Cross-sectional data, however, pertain to different entities for a given time period or at a given time. Thus, cross- sectional regression analysis is the most appropriate statistical tool because it compares attributes of all stores' operating statistics at one moment in time.
What coefficient of correlation results from the following data?
The coefficient of correlation (in standard notation, r) measures the strength of the linear relationship. The magnitude of r is independent of the scales of measurement of x and y. Its range is -1 to +1. A value of -1 indicates a perfectly inverse linear relationship between x and y. A value of zero indicates no linear relationship between x and y. A value of 1 indicates a perfectly direct relationship between x and y As x increases by 1, y consistently decreases by 2. Hence, a perfectly inverse relationship exists, and r must be equal to -1.
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