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Assignment 1 Making Decisions Based on Demand and Forecasting

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Assignment 1 Making Decisions Based on Demand and Forecasting
Making Decisions Based on Demand and forecasting
Domino’s Pizza
Assignment 1

Professor :

COURSE NAME:
ECO 550: Managerial Economics and Globalization

October 27, 2012

Assignment 1: Making Decisions Based on Demand and Forecasting

1. Report the demographic and independent variables that are relevant to complete a demand analysis providing a rationale for the selection of the variables.

According to bundle website (2012), business is defined as normally Domino’s has made gains in three key measures: 1)Penetration i.e. the percentage of all households in the US that has ordered at least once from Dominos in the last year (last year Dominos delivered to 14% of all homes!), 2)The frequency with which a customer re-orders (about once per month), 3)The average value on the receipt ticket from each order (typically around 23)The demographic of Domino’s Pizza in my community at the following; Demographics of dominos’ pizza customers in zip code 20814 where I live ; You are more likely to see these groups of people at Domino’s pizza than in other local restaurants.

Location: 30% of Domino 's Pizza customers reside in zip code 20814, 79% are from Montgomery County, 83% are from Maryland, and 17% are from out of state.

The majority of customers spend a total of $16-35 per transaction, and the typical (median) total cost is $23. Total cost includes taxes and gratuities, and does not account for party size.

2. Using Excel or other calculation software, input the data you collected in criterion one to calculate an estimated regression. Then, from the calculation provided, interpret the coefficient of determination, indicating how it will influence your decision to open the pizza business. Explain any additional variables that may improve the coefficient of determination.

Table 1. Sample data: The demand


References: Bundle unbiased, data-driven rating (2011). Domino’s pizza company. Retrieved on October 24, 2012 from http://www.bundle.com/merchant/detail/dominos-pizza-bethesda-md-3811080/#customers Dean. G. (2010), Domino pizza beyond the dough. Retrieved on October 26, 2012 from http://marketography.com/2010/03/09/dominos-pizza-beyond-the-dough/ Franchisedirect.com(2010), Pizza franchise Industry report. Retrieved on oct,26 2012 from http://c1176552.r52.cf0.rackcdn.com/pizza-franchise-industry-report.pdf McGuigan, J. R., Moyer, R. C.,& Harris, F. H. D. (2008). Managerial economics: Applications, strategy, and tactics (12th ed.). Mason, OH: South-Western Cengage Learning
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