A large Toyota car dealership offers purchasers of new

1. A large Toyota car dealership offers purchasers of new Toyota cars the option to buy their used
car as part of a trade-in. In particular, a new promotion promises to pay high prices for used
Toyota Corolla cars for purchasers of a new car. The dealer then sells the used cars for a small
profit. To ensure a reasonable profit, the dealer needs to be able to predict the price that the
dealership will get for the used cars. For that reason, data were collected on all previous sales of
used Toyota Corollas at the dealership. The data include the sales price and other information
on the car, such as its age, mileage, fuel type, engine size, etc. A portion of the data set is shown
below.

For this problem, let’s consider building a Two-Way ANOVA model to predict the price of the
used car based on the Age of the car (less than 2 years old vs. more than 2 years old) and the
Horsepower (90 vs 110 vs 192). Ignore the rest of the data, for the purpose of this problem.
a. Is this a single replicate or replicated Two-way ANOVA problem? Are you able to
estimate the interaction of the two Factors?
b. List the two Factors (A and B) and the number of levels of each
c. Write out the model the dealership is interested in investigating as well as the
three sets of hypotheses to be tested
d. Using the JMP output, what can we conclude about the main effect of Age, main
effect of Horsepower, and interaction of Age*Horsepower? If applicable, write
each of these conclusions in a sentence and report the corresponding p-value.
e. In a sentence or two, show and interpret the interaction plot. (i.e. What insight
do you gain from this plot?)
f. If you were employed at this dealership, what would be your recommendation
for the combination of Age and Horsepower levels that will sell at the highest
average price of used Toyota Corollas? (could be more than 1 correct answer)

g. If you were employed at this dealership, what would be your recommendation
for the combination of Age and Horsepower levels that will sell at the lowest
average price of used Toyota Corollas? (could be more than 1 correct answer)
h. Interpret the 95% confidence interval for the difference in used Corolla price for
cars with 90 Horsepower that are less than 2 years old compared to cars with 192
Horsepower that are more than 2 years old.
i.

If the next customer wants to trade-in their used Toyota Corolla that is 4 years
old with 192 Horsepower, predict the car’s price that the dealership should be
able to sell this car.

Note* If you scroll down, you will find all the screenshots for question # 2. You don’t have to run the
data, just use the screen shots to answer the questions.