In this assignment, you will have the opportunity to practice using the Bass Model. As we discussed this week, the Bass Model of diffusion is one of the most widely used, frequently referenced, and thoroughly researched models in business. To make this assignment a more relevant and rewarding process, you will be applying the

Bass Model to an emerging product category$-$hybrid vehicles. Hybrid vehicles are a primary class of motor vehicles that serve transportation needs while reducing air pollution caused by gasoline consumption. The

vehicles are powered by the mix of an electric motor and a traditional gas engine. The Toyota Prius has been the best$-$selling hybrid car in recent years.

Assignment Requirements

A large number of research studies have estimated parameters p and q of the Bass Model for many product categories. These estimates are posted in a pdf file on the course website.

$(1)$ Based on these data, estimate the values of p and q for the hybrid vehicles. The Harvard notes by Ofek provide details on the estimation process. The process is also summarized in the lecture notes. You

should follow that process; but need to make several important judgments such as what analogous product categories to use, the similarities between the innovation and the analogous categories, and the weights of the attributes. In your assignment, provide details of these steps and the assumptions you make.

$(2)$ After you estimated p and q values, assume a market size of m$=1,000,000$ units. Then use the first equation in Ofek's Appendix to forecast annual sales. This equation is a critical part of the Bass Model:

S$=$p$-$m$+($q$-$p$)*$N$\_($t$-2)-($q$//$m$)*$N$\_($t$-2)^(2)$

S$\_(2)$ is the annual sales of year L$,$N$\_($i$)$ is the cumulative or aggregate sales from year $1$ to year t$-1,$N$\_(21)^(2)$ is the square term of N$\_($t$-1),$ i$.$e$.,$ N$\_(6-1)^(2)=$N$\_($s$-1)$xxN$\_(1-2).$ Obviously N$\_(0)=0.$ You should start from year t$=1,$ and continues the calculation until three years after the sales peak. You can estimate the annual sales with an Excel sheet, by computing N$\_($T$-2),$N$\_($t$),$ and S$\_(5),$ starting from vear t$=1.$

To show the work, you can describe how you conducted the forecasts, and provide the Excel worksheet that you used $($you can copy and paste the image of your worksheet to Word, using snipping or screen

capturing tools$).$ The Excel worksheet must be clear and placed in the Appendix; it does not count in the page limit$.$ Highlight the year when the sales peak. Discuss the forecast results in terms of diffusion speed, the number of cars that could be potentially sold, etc.