REGRESSION ANALYSIS: EXPLAINING OVERHEAD COST

 REGRESSION ANALYSIS: EXPLAINING OVERHEAD COST

This is my Business Analytics topic on Scatterplots Graphing Relationships.

The Finance manager of a factory wants to get a better understanding of overhead costs. These overhead costs include supervision, indirect labor, supplies, payroll taxes, overtime, depreciation, and a number of miscellaneous items such as insurance, utilities, and janitorial and maintenance expenses.  Some of these overhead costs are fixed whereas others are variable and do vary directly with the volume of work.

The Finance Manager has tracked total overhead costs for the past 36 months, To help explain these, he has also collected data on two variables that are related to the amount of work done at the factory. These variables are:

·         Machine Hours: number of machine hours used during the month

·         Production Runs: the number of separate production runs during the month.

Objective: To use scatter plots of Tableau to examine the relationships among overhead, machine hours, and production runs.

The data is available at   https://github.com/alcadelina/business-analytics-excel-data

The output:

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 Conclusion: The Finance Manager should continue to explore the positive relationship between Overhead and each of the Machine Hours and Production Runs. However, none of the variables appears to have any time series behavior, and the two powerful explanatory variables do not appear to be related to each other.