RIDGE REGRESSION AS A COST ESTIMATION TECHNIQUE.

John Edward Ketz, Wayne E. Leininger

Research output: Contribution to conferencePaperpeer-review

Abstract

Multiple regression is employed in cost estimation with prudence because of the frequently encountered problem of multicollinearity. This existence of multicollinearity causes a loss in the precision of the estimates of the regression coefficients and their related standard errors. Ridge regression is a biased regression estimation procedure that results in a substantial reduction in the total variance of a system while only slightly increasing the bias. In this paper it is demonstrated how problems resulting from the existence of multicollinearity in cost estimation can be overcome by employing ridge regression.

Original languageEnglish (US)
Pages19-21
Number of pages3
StatePublished - Jan 1 1979
EventUnknown conference - New Orleans, LA, USA
Duration: Nov 19 1979Nov 21 1979

Other

OtherUnknown conference
CityNew Orleans, LA, USA
Period11/19/7911/21/79

All Science Journal Classification (ASJC) codes

  • Engineering(all)

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