Ceapro is an Edmonton-based biotechnology company known for turning oats into beneficial products. Ceapro is the worlds

Question:

Ceapro is an Edmonton-based biotechnology company known for turning oats into beneficial products. Ceapro is the world’s only commercial manufacturer of avenanthramides, a group of therapeutic molecules found exclusively in oats. Its clients use avenanthramides as ingredients in cosmetics and personal care products such as creams that help alleviate skin conditions resulting from eczema, chicken pox, and insect bites. Scientists have recently discovered that avenanthramides could also be taken orally and may help reduce symptoms of diseases such as inflammatory bowel syndrome, atherosclerosis, colon cancer, and joint inflammation. Ceapro had long had a steady market for its avenanthramides for personal care products, with clients including Aveeno, Jergens, Coppertone, Dove, and Neutrogena, but realized that moving into the pharmaceutical area could open up potentially lucrative markets. However, it requires one tonne of oats to extract just a few spoonfuls of avenanthramides. In 2012, Ceapro entered into two agreements with Agriculture and Agri-Food Canada that will see the development of a new variety of oats with characteristics that should significantly increase the quantities and purity of avenanthramides, supplying Ceapro with enough oats to eventually produce pharmaceutical-grade avenanthramides. The company also sees the potential to use avenanthramides in “nutraceuticals”— foods that have therapeutic benefits.In 2016, Ceapro opened a new bioprocessing extraction facility in Edmonton with state-of-the-art equipment to gear up for increased production. The company also expected to boost its profit margin as the new plant is more efficient. Three years later, in May 2019, Ceapro announced that both its plants had received Site Licences from Health Canada’s Natural and Non-Prescription Health Products Directorate. These licences allow Ceapro to fabricate, package, label, release, and distribute biopharmaceutical products. Ceapro also produces beta glucan, a by-product of oats, which helps reduce cholesterol, moderate blood sugar levels, and stimulate collagen synthesis. In 2018 the company began a long-term collaboration with the Montreal Heart Institute to carry out clinical research, starting with a study of beta glucan’s ability to lower cholesterol. The company signed a licence and distribution agreement in 2013 with German-based multinational Symrise, the leading provider of active ingredients in the cosmetic market. In 2017 Ceapro acquired Quebec-based company Juvente and launched a proprietary line of cosmeceutical products. Ceapro’s annual sales have been over $10 million in the last few years, and President and CEO Gilles Gagnon has noted the company “has all the key components for success based on a very solid foundation, a highly competent team, a healthy balance sheet and a very strong technology and product portfolio with the potential to access key large markets.”

Discussion1. With every business, it is important to evaluate what components are relevant to the size of a customer’s purchase. Ceapro’s management is interested in determining this information. Suppose its research team is able to obtain appropriate and relevant data on several customer companies. These data will allow Ceapro to analyze what variables may be predictors of the size of the purchase. The data that Ceapro collected from 15 companies include four variables: the total size of the purchase, the size of the purchasing company, the cost of delivery, and the number of similar products that the purchasing company has. Use the techniques learned in this chapter to obtain a multiple regression model to predict the size of the purchase on the basis of all or some of the other variables mentioned above. Determine the goodness of fit of the regression model, and determine which variables (if any) contribute significantly to the prediction of size of purchase.2. Assume that Ceapro has been able to gather the following data for the past 10 years regarding average sales, average hours worked per week by full-time employees, and the number of customers that purchase Ceapro’s products. Analyze the average hours worked per week and the number of customers, and interpret how these two variables are relevant to the sales figures. In order to address this, construct scatter plots to analyze the possibility of a relationship between the sales and hours worked per week and the sales and the number of customers. Would it be possible to recode the data using Tukey’s four-quadrant approach? If yes, use and explain the approach. The relationship between these variables may also be examined by using stepwise regression analysis; therefore, let the response variable be the sales figure and allow the predictors to be average number of hours worked per week, number of customers, and any new variables that have been developed through the recoding process. With all the information you have collected, you can now analyze the quadratic relationships, interaction, and any other relationships by using stepwise regression.3. Ceapro is doing well and is growing. However, there is always a risk of reverting back to being the financially unstable company it once was if it does not continue to invest in R&D and develop new products. Ceapro’s sales have been healthy over the last few years; however, these sales may stall or decrease. What if, at this point, Ceapro still continues to hire employees? Below are the data indicating how these figures might look over a future 10- year period. By using the sales as the response variable and the number of employees as the predictor, graph the information and then use Tukey’s four-quadrant approach to analyze the graph. Now, construct and explore a regression model in order to predict sales by using the number of employees. Analyze the information that you find and determine whether there is any need for concern or any need to contact top management to inform them of any critical issues.