A large food chain owns a number of pharmacies that operate in a variety of settings. Some are situated in small towns and are o
pen for only 8 hours a day, 5 days per week. Others are located in shopping malls and are open for longer hours. The analysts on the corporate staff would like to develop a model to show how a store’s revenues depend on the number of hours that it is open. They have collected the following information from a sample of stores.
HOURS OF OPERATION AVERAGE REVENUE
40 5958
44 6662
48 6004
48 6011
60 7250
70 8632
72 6964
90 11097
100 9107
168 11498
A. Use a linear function to represent the relationship between revenue and operating hours and find the best values of the parameters that provide the best fit to the given data. What revenue does your model predict for 120 hours?
B. Suggest a two-parameter nonlinear model (think power model) for the same relationship and find the parameters that provide the best fit. What revenue does your model predict for 120 hours?
C. Which model do you prefer and why?
HOURS OF OPERATION AVERAGE REVENUE
40 5958
44 6662
48 6004
48 6011
60 7250
70 8632
72 6964
90 11097
100 9107
168 11498
A. Use a linear function to represent the relationship between revenue and operating hours and find the best values of the parameters that provide the best fit to the given data. What revenue does your model predict for 120 hours?
B. Suggest a two-parameter nonlinear model (think power model) for the same relationship and find the parameters that provide the best fit. What revenue does your model predict for 120 hours?
C. Which model do you prefer and why?
1 answer:
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