Enterprise Industries produces Fresh, a brand of liquid laundry detergent. In order to manage its inventory more
Question:
y = the demand for the large size bottle of Fresh (in hundreds of thousands of bottles) in the sales period
x1 = the price (in dollars) of Fresh as offered by Enterprise Industries in the sales period
x2 = the average industry price (in dollars) of competitors' similar detergents in the sales period
b3 = Enterprise Industries' advertising expenditure (in hundreds of thousands of dollars) to promote Fresh in the sales period
Figure 14.7 gives the Excel output of a regression analysis of the Fresh Detergent demand data in Table 14.5 using the model
y = β0+ β1x1 + β2x2 + β3b3 + ε
a. Find (on the output) and report the values of b1 b2 and b3 the least squares point estimates of β1, β2, and β3 Interpret b1 b2, and b3.
b. Consider the demand for Fresh Detergent in a future sales period when Enterprise Industries' price for Fresh will be x1 = 3.70. the average price of competitors' similar detergents will be x2 = 3.90 and Enterprise Industries' advertising expenditure for Fresh will be b3 = 6.50. The point prediction of this demand is given at the bottom of the Excel add-in output. Report this point prediction and show (within rounding) how it has been calculated.
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Related Book For
Business Statistics In Practice
ISBN: 9780073401836
6th Edition
Authors: Bruce Bowerman, Richard O'Connell
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