Method of Least Squares
Using optimization techniques from earlier in section 8.3, we can develop and explain the mathematical
foundation of the method of least squares:
Question: What do we mean by "best" approximation?
Suppose we have the following data:
Quantity
cost
x (in hundreds)
y (in thousands)
2
4
5
6
6
7
9
8
Goal: Find a and b such that the sum of the squares of the residuals is minimized.