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Contents:
Case Overview
Characteristics of a Diamond * The Four C’s (Color, Carat, Cut and Clarity) * Symmetry and Polish * Certification
Pricing
Data Set
Regression Analysis * Full Level – Level type Model * Partial Level – Level Model (Carat) * Partial Level – Level Model (Carat*Color) * Ln – Ln Model * Ln – Level Model * Level – Ln
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….βk are coefficients of the ‘k’ predictor variables (k = 7 in this model). The coefficients indicate how the price changes by a unit change in any variable, keeping rest of the variables constant.
The output shows that cut, polish and certification have t-stats and corresponding p-values that are considerably greater than 0.05 (significance level). A stepwise regression drops these variables, indicating that they are not a good fit for the model (Appendix).
One reason might be that the scatterplot of price vs. carat shows observations being clumped; representing the three different wholesalers (Appendix). Making inferences on this scatterplot shows that wholesaler 3 carries diamonds in the range of $160 to $665, significantly lower than the total range. These observations might lead to inaccurate prediction of the effect of predictor variables on price. Also, it can be seen from the scatterplot that wholesaler 1 deals in diamonds falling under a very small interval of $3000 to $3091, while the ones from wholesaler 2 fall in the range of $1856 to $3145.
As a result, this paper makes an assumption that only data from wholesalers 1 and 2 will fit the model best, in terms of finding the correct diamond for the professor.
2. Partial Level – Level Model (Carat):
Considering the assumption made above, the next model regresses price on all the variables, but only for diamonds from wholesalers 1 and 2. It
The diamond industry impacts the people of West Africa by creating a whirlwind of corruption on a political level. In sierra Leone diamonds were a valuable part of the land and they were once legitimately sold up until Sierra Leone became independent in 1961. The following years of their independence corruption flooded the land. According to an online research paper it says “with that independence came corrupt leaders, manipulation of the people , rebel groups, rivalries and civil disputes”. The correlation implies that the diamond industry has created an environment that leaves people at risk of violence, and unfair treatment by their government. The longer the diamond industry is in effect, the longer West African people will suffer from the world market demanding diamonds. Because of globalization it doesn’t look
For centuries, diamonds have been regarded as one of the most valuable commodities in the world and the industry has evolved into billions of dollars. At the top, De Beers dominated the entire industry worldwide, from exploration to retail selling. However, it has a reputation of a monopolist, where it influences supply and demand. The two critical factors that De Beers carefully maintained throughout the century to remain in monopoly was to create the illusion of the scarcity of the diamonds and to keep the prices high. Realizing the benefits of the cooperation and the dangers of the oversupply, most
At the time I checked, there where 771002 listings under natural diamonds. As the number of the seller increases, the supply of these diamonds increases as well. McConnell, C., Brue, S., & Flynn, S. (2012) explains that ““A shift to the right, as from S 1 to S 2 in Figure 3.5 , signifies an increase in supply” (p. 53). This is exactly what would happen in this case because as the supply of the diamonds goes up , the curve will be shifted to the right, and will also decrease prices. As more members join eBay.com it means that there are more buyers and this will automatically increase the demand of these goods as well. Also explain on (p.50) on the McConnell text.
The case involves the decision to locate a new store at one of two candidate sites. The decision will be based on estimates of sales potential, and for this purpose, you will need to develop a multiple regression model to predict sales. Specific case questions are given in the textbook, and the necessary data is in the file named pamsue.xls.
Pam and Susan’s department stores are in the process of opening a new business unit. There are two locations that are being considered for the new store and decision is based upon estimates of sales for both of them. My job is to use data gathered from each store as well census data in store’s trading zones to predict sales at both of the sites that are being consider for their newest store.
II. Explore the supply and demand conditions for your firm’s product. a) Evaluate trends in demand over time, and explain their impact on the industry and the firm. You should consider including annual sales figures for the product your firm sells. b) Analyze information and data related to the demand and supply for your firm’s product(s) to support your recommendation for the firm’s actions. Remember to
The purpose of this case is to determine which key variables drive Crusty Pizza Restaurant’s monthly profit and then forecast what the monthly profit would be for potential stores. Based off of this information we will be able to make a recommendation to Crusty Dough Pizza Restaurant on which stores they should open and which they avoid. The group was provided 60 restaurants’ data that included monthly profit, student population, advertising expenditures, parking spots, population within 20 miles, pizza varieties, and competitors within 15 miles. For the potential stores we were given all of this
Because of the method of monthly data collection, absolute randomness could not be obtained; however, it was decided that 5 iterations was sufficient because the sixth iteration showed a decrease in the quality of the residual plots. The first test performed was the p-value test of the individual variables. A p-value is the probability, ranging from 0 to 1, of obtaining a test statistic similar to the one that was actually observed. The only input that did not have a p-value less than 0.05, which was the chosen significance level, was the “Number of Walmarts” variable; the number of Walmarts has no specific effect on the output, property crime rate. The R2 of the analysis, or the coefficient of determination, provides a measure of how well future outcomes are likely to be predicted by the model. R2 values range from 0 to 100% (or 0 and 1) and the
Diamonds bought very frequently. Diamonds are the ultimate luxury. A cut in price wouldn't increase demand very
β0 is a constant and β1- β8 are coefficient parameters to be estimated. The priori expectation signs of the parameters are β1 = β2 = β3 = β4 = β5 = β6 > 0 i.e. all the independent/explanatory variables are projected to have positive force on the dependent/endogenous variable.
* Stock Beta: Exhibit 5 shows a detailed measurement of the company’s stock returns in relation to the rest of the market through 5-year historical price and index data. The analysis includes monthly returns of both the NYSE and the S&P 500 index in order to capture a comprehensive view of the market return. In each comparison, the monthly returns of the Target stock and market are plotted on Y-axis and X-axis respectively to get the regression line’s slope or beta. The analysis arrives at an average beta of 0.988 which indicates a similar movement of Target stock’s returns in comparison to the whole market over time.
In (Table 3) and (Table 4) we apply these allocation rates with Customers A and B to illustrate how costs are affected by the ordering habits of customers
Using the sample data given in Table 2-20, make a recommendation for how many units of each style Wally should make during the initial phase of production. Assume that all of the 10 styles in the sample problem are made in Hong Kong and that Wally’s initial production commitment must be at least 10,000 units. Ignore price differences among styles in your initial analysis.
Here is the "intercept" and β1, β2, β3, and so on, are the "regression coefficients" of , , and so on
Color. Clarity. Cut. Carat Weight: These four words are what jewelers in the industry use to determine the monetary value of a diamond. However in 1947 De Beers found a way to not only boost their sales but also make a psychological necessity out of this sparkly stone, and it all began with four vastly different words, “A Diamond Is Forever” (Frances Garety), and accompanied by phrases such as “Isn’t two months’ salary a small price to pay for something that lasts forever (N.W. Ayers)?