Mustangs Case

Executive Summary

This project will be focusing on 35 Ford Mustangs with a multitude of variables. The variables include price, age of car, mileage, transmission, air conditioning, amount of cylinders, vehicle color, ownership style, body style, and model type. This study will also determine if the mean price of the vehicle is dependent upon the previously mentioned variables excluding vehicle color; identifying variables of significance. Highlighting the significant variables and how they affect price will serve as a tool assisting the company with pricing future Ford Mustangs.

Ford Mustangs

Tom has currently opened a used car dealership. Previously Tom repaired and collected older model cars as a hobby and recently decided to turn his hobby into a career for himself. Tom has a great deal of technical understanding concerning car parts and how to repair certain vehicle parts. However, Tom has little to no experience on the business end of owning a car dealership. It has been reported that Tom's asking prices for his vehicles are not aligned with the average market price. Ultimately, Tom does not base his prices on the used car market price; instead he bases it on assumptions. For example, Tom thinks, red cars give the impression of being "sportier and can sell at a premium," he also believes older models normally sell for less. After much dismay and inaccurate rates in sells, Tom tries to systematically price his Mustangs, but due to the multitude of variables, Tom found this task challenging. (Bowerman, 2003, p. 3)

This report will provide information obtained through hypothesis confidence intervals and hypothesis testing, multiple and simple regression models, descriptive statistics, and historical background information pertaining to Tom's Ford Mustangs. This report will pay close attention to the possible relationship between the dependent variable, selling price, and the multiple independent variables, mileage, model, engine size, transmission type, owner type, color, age of car, and convertible. Subsequently, this report will make pertinent recommendations concerning the improvement of Tom's business exercises. In order to make these recommendations, Type I hypothesis error and other elements of sample testing will be evaluated. The hypothesis is Ho > 8194 Ha < 8194. This report will enable Tom to effectively price his Ford Mustangs.

Method

In this report there were several statistical test executed to aid Tom in systematically pricing his Ford Mustangs. The first and most important test was the descriptive statistics which gave the mean, variance, standard deviation, and the lower and upper confidence intervals. A multiple regression model was conducted. After this test was conducted it concluded that only three of the independent variables showed significance. Therefore,