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.