Chapter 14.2, Problem 9E

Companies in the U.S. car rental market vary greatly in terms of the size of the fleet, the number of locations, and annual revenue. In 2011 Hertz had 320,000 cars in service and annual revenue of approximately $4.2 billion. The following data show the number of cars in service (1000s) and the annual revenue ($millions) for six smaller car rental companies (Auto Rental News website, August 7, 2012).

1. a. Develop a scatter diagram with the number of cars in service as the independent variable.
2. b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
3. c. Use the least squares method to develop the estimated regression equation.
4. d. For every additional car placed in service, estimate how much annual revenue will change.
5. e. Fox Rent A Car has 11,000 cars in service. Use the estimated regression equation developed in part (c) to predict annual revenue for Fox Rent A Car.