Term Paper: Managerial Decisions Run the Research Methods

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¶ … Managerial Decisions

Run the Research Methods for Managerial Decisions simulation and then answer the following questions, in short answer format:

Laura wanted to build a multiple regression model based on advertising expenditures and coffee times price index. Based on the selection of all normal values she obtained the following:

Multiple R = 0.738

R-square = 0.546

By using lagged values she came up with the following:

Multiple R = 0.755

R-square = 0.570

Explain the differences in using these different models. How could CoffeeTime further optimize this model?

By having the lagged values included in the second multiple regression equation, more variation in the dependent variables are defined. Without using any lagged variables, only a small proportion of total predictability in the dependent variable is produced through the use of this statistical technique. Adding in lagged independent variables, most notably the lagged value of competitor's advertising spending will also increase the Multiple R. And R-square values generated, as greater variability in the dependent variable will be explained. The steps that CoffeeTime can take to increase the robustness of this model and further optimize it are to include more independent variables that specifically address the spending of competitors, their pricing, and consumer demand.

A b.

Tourism is one consideration for CoffeeTime's future. A survey of 1,233 visitors to Mumbai last year revealed that 110 visited a small cafe during their visit. Laura claims that 10% of tourists will include a visit to a cafe. Use a 0.05 significance level to test her claim. Would it be wise for her to use that claim in trying to convince management to increase their advertising spending to travel agents? Explain.

Yes, it would, provided she uses a one-tailed Z-test at the.05 confidence level and chooses a sample size of 120. Further, the null and alternative hypotheses to either reject or accept the hypothesis that tourists do in fact have a statistically significant influence on CoffeeTimes' sales could be completed. The use of the z-test provides a comparison of sample means to ascertain the statistical significance of tourists having a significant financial impact on CoffeeTime coffee shop sales.

Part 2:

What additional strategy (or variation on a given strategy) would you recommend to the key decision maker in the simulation to solve the challenge given?… [END OF PREVIEW]

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