ABSTRACT
This chapter outlines the modeling techniques with an actual study from engineering economics. Consider the problem of modeling the price charged for motor transport service in Florida. The shipments of interest were made by one particular carrier whose trucks originated from either the city of Jacksonville or Miami. The dependent variable of interest is y, the natural logarithm of the price charged per ton-mile. A quantitative independent variable is one that assumes numerical values corresponding to the points on a line. The waiting time before a computer begins to process data, the number of defects in a product, and the kilowatt-hours of electricity used per day are all examples of quantitative independent variables. The most common linear models relating y to a single quantitative independent variable x are those derived from a polynomial expression of the type shown in the box. Specific models, obtained by assigning particular values to p, are listed subsequently.
