You work for PriceWatermanCoopers (PWC) as a market analyst. PWC has been hired by a Bay Area Rapid Food hamburger chain located in a suburban San Francisco market area to study the determinants of...

University of Houston-Victoria QMSC 6351 Statistics and Research Methods Spring 2013 TERM PROJECT DETERMINANTS OF TOTAL REVENUE FOR THE BAY AREA RAPID FOOD HAMBURGER FRANCHISE 2 TERM PROJECT Determinants of Total Revenue For the Bay Area Rapid Food Hamburger Franchise ASSIGNMENT You work for PriceWatermanCoopers (PWC) as a market analyst. PWC has been hired by a Bay Area Rapid Food hamburger chain located in a suburban San Francisco market area to study the determinants of its total revenue. Each week the management of the Bay Area Rapid Food hamburger chain must decide how much money should be spent on advertising their products and what specials (lower prices) should be introduced for that week. The following issues are of particular interest to management: (1)Management would like to know how total revenue changes as the level of advertising expenditure changes. Does an increase in advertising expenditure lead to an increase in total revenue? If so, is the increase in total revenue sufficient to justify the increased advertising expenditure? (2)Management is also interested in pricing strategy. Will reducing prices lead to an increase or decrease in total revenue? If a reduction in price leads only to a small increase in the quantity sold, total revenue will fall (demand is price inelastic); a price reduction that leads to a large increase in quantity sold will produce an increase in total revenue (demand is price elastic). (3)Management would also like to know whether there is a significant seasonal pattern (autumn/winter vs spring/summer) in total revenue. This economic information is essential for effective management. The Bay Area Rapid Food hamburger chain provides PWC with the data shown in the attached Excel file. TR represents total revenue (in thousands of dollars) for a given week. Every week the Bay Area Rapid Food hamburger chain advertises special price offers at its restaurants exclusively in daily newspaper advertisements. A is the level of...