Decision Science

QUESTION # 1 25 MARKS Mr. Andre Buckle was appointed manager of Startops, a chain of coffee shops island wide. Andre is uncertain of the price point at which to sell the popular mocha latte. He has collected data of number cups of latte sold versus price per cup over the last eight (8) weeks in an attempt to better understand the market. This data is shown below. No. of 760 510 980 250 320 480 820 1020 cups of Coffee sold Price 440 560 320 672 497 648 350 220 per cup(Ja$) a) Using the regression analysis tool in excel, show the printout for this study 5 marks b) From the printout in a) above develop the estimated regression equation of the study 5 marks c) What is the value of the Product Moment Co-efficient of Correlation? What is the relationship between the variables? 4 marks d) Is the model a good predictor? Explain. 6 marks e) Head office has mandated that Andre must increase the profit on each cup of latte sold and must sell each cup of latte for Ja$720 next week. Andre just checked the latte mix in inventory and has found that if he does not make and sell 260 cups next week he will have to discard (throw out) some of the mix. Will Andre have to throw out some of the latte mix. 5 marks