The Links Company sells its golf clubs at golf outlet stores throughout the United States. The company knows that demand for its clubs varies considerably with price. In fact, the price has varied over the past 12 months, and the demand at each price level has been observed. The data are in the data sheet of the file Golf Club Demand.xlsx (see Figure 2.26). For example, during the past month, when the price was $390, 6800 sets of clubs were sold. (The demands in column C are in hundreds of units. The cell comment in cell C3 is a reminder of this.) The company wants to estimate the relationship between demand and price and then use this estimated relationship to answer the following questions: In the profit model in this section, we used the power curve to relate demand and price because it has the lowest MAPE (as well as the lowest RMSE and MAE). However, the exponential curve was not far behind. Rework the profit model using the exponential curve to relate demand to price. Write a brief memo indicating whether you get basically the same results as with the power curve or you get substantially different results.

BuyFind

Practical Management Science

6th Edition
WINSTON + 1 other
Publisher: Cengage,
ISBN: 9781337406659
BuyFind

Practical Management Science

6th Edition
WINSTON + 1 other
Publisher: Cengage,
ISBN: 9781337406659

Solutions

Chapter
Section
Chapter 2.6, Problem 13P
Textbook Problem

The Links Company sells its golf clubs at golf outlet stores throughout the United States. The company knows that demand for its clubs varies considerably with price. In fact, the price has varied over the past 12 months, and the demand at each price level has been observed. The data are in the data sheet of the file Golf Club Demand.xlsx (see Figure 2.26). For example, during the past month, when the price was $390, 6800 sets of clubs were sold. (The demands in column C are in hundreds of units. The cell comment in cell C3 is a reminder of this.) The company wants to estimate the relationship between demand and price and then use this estimated relationship to answer the following questions:

In the profit model in this section, we used the power curve to relate demand and price because it has the lowest MAPE (as well as the lowest RMSE and MAE). However, the exponential curve was not far behind. Rework the profit model using the exponential curve to relate demand to price. Write a brief memo indicating whether you get basically the same results as with the power curve or you get substantially different results.

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Chapter 2 Solutions

Practical Management Science
Ch. 2.6 - The Links Company sells its golf clubs at golf...Ch. 2.6 - The Links Company sells its golf clubs at golf...Ch. 2.6 - The Links Company sells its golf clubs at golf...Ch. 2.7 - Acron is a large drug company. At the current...Ch. 2.7 - Acron is a large drug company. At the current...Ch. 2.7 - Acron is a large drug company. At the current...Ch. 2.7 - Acron is a large drug company. At the current...Ch. 2.7 - Acron is a large drug company. At the current...Ch. 2.7 - Acron is a large drug company. At the current...Ch. 2 - Julie James is opening a lemonade stand. She...Ch. 2 - You are thinking of opening a Broadway play, I...Ch. 2 - You are thinking of opening a small copy shop. It...Ch. 2 - Georgia McBeal is trying to save for her...Ch. 2 - A European call option on a stock earns the owner...Ch. 2 - Repeat parts a-d of the previous problem for a...Ch. 2 - The file P02_26.xlsx lists sales (in millions of...Ch. 2 - Dataware is trying to determine whether to give a...Ch. 2 - The file P02_28.xlsx gives the annual sales for...Ch. 2 - Assume that the number of units sold of a product...Ch. 2 - A company manufacturers a product in the United...Ch. 2 - The yield of a chemical reaction is defined as the...Ch. 2 - A bond is currently selling for 1040. It pays the...Ch. 2 - Assume the demand for a companys drug Wozac during...Ch. 2 - Consider a project with the following cash flows:...Ch. 2 - A software company is considering translating its...Ch. 2 - The payback of a project is the number of years it...Ch. 2 - You are entering the widget business. It costs...Ch. 2 - Suppose you are borrowing 25,000 and making...Ch. 2 - You are thinking of starting Peaco, which will...Ch. 2 - Suppose the demand (in thousands) for a toaster is...Ch. 2 - The file P02_41.xlsx contains the cumulative...Ch. 2 - A large U.S. drug company, Pharmco, has 100...Ch. 2 - The file P02_43.xlsx contains a template for a car...Ch. 2 - The IRR is the discount rate r that makes a...Ch. 2 - A project does not necessarily have a unique IRR....Ch. 2 - The file P02_46.xlsx contains data on prices of...Ch. 2 - Ewing Natural Gas is a large energy company with...Ch. 2 - The eTech Company is a fairly recent entry in the...

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