Suppose the company in Example 16.2 produces a single product at three different manufacturing plants. As in that example, the company wants to regress total cost on units produced, but it suspects...

Suppose the company in Example 16.2 produces a single product at three different manufacturing plants. As in that example, the company wants to regress total cost on units produced, but it suspects that the relationship between these variables might differ across plants. It has monthly data from the past 16 months for each of the plants, some of which appear in Figure 16.16. (See the file Cost Regression 3.xlsx.) How can the company use dummy variables to estimate the relationship between Total Cost and Units Produced for all three plants simultaneously?

Objective To use dummy variables for plants to estimate a single regression equation relating total cost to units produced for all three plants.