A Scatter Diagram Includes the Following Data Points Two Regression Models Are Proposed:
Model 1

question 72

Essay

A scatter diagram includes the following data points:
$$\begin{array} { | l | l | l | l | l | l | } \hline \mathbf { x } & \mathbf { 3 } & 2 & 5 & 4 & 5 \\\hline \mathbf { y } & \mathbf { 8 } & 6 & 12 & 10 & 14 \\\hline\end{array}$$ Two regression models are proposed:
Model 1: $\hat { y } =$ 1.2 + 2.5x
Model 2: $\hat { y } =$ 5.5 + 4.0x
Using the least squares method,which of these regression models provide the better fit to the data? Why?

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Definitions:

Bullwhip Measure

A method or metric used to quantify the degree of the bullwhip effect within a supply chain.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, used in statistics to quantify the variance from the mean.

Bullwhip Effect

The phenomenon where variations in demand at the retail level cause progressively larger fluctuations in demand at the wholesale, distributor, manufacturer, and raw material supplier levels.

Shortage Gaming

A strategy used in supply chain management where participants may exaggerate their needs to avoid stockouts, often leading to inefficiencies or distortions in supply chains.