Instructions

•   The assignment is due at the beginning of session 4.

•   Submission by email or hardcopy is not accepted. Please upload the answers at Canvas for items 1 and 2,with item 2 on top.

•   The format can be either MS Word or PDF (no html). You can attach R codes, but simply submitting .R codes without any analyses will not be accepted. In case you have trouble converting html to word/pdf, please copy and paste the scanned images onto Word or PDF document.

•   You can collaborate and discuss with your colleagues within or outside your assigned group. However, you will be submitting your own write-up.

•   Late submission will not be accepted and receive 20% deduction per day.

Item 1: Price and Promotion Analysis on ZonePerfect Bar

In this exercise you will be using the data we used in the in-class exercise in week 3: “energy_bars.csv.” For item 1, please attach the relevant R codes and outputs, including figures, in the report. Please consider using rmarkdown for your efficient and effective reporting, but copying and pasting from R console window is fine as  well. There is no page limit for item 1.

Questions: 20 points in total

1.   [8 points] Descriptive analysis

a.   Provide the summary statistics of all variables. What is the price range (i.e., min and max) of ZonePerfect Bar (henceforth ZPB)?

b.   Provide a line graph that shows the variation in ZPB’s price and units sold over the data period (i.e., weeknum 1- 156). You can either create one graph that contains both price and quantity’s trajectories overtime or two graphs: one with price variation overtime and another with quantity variation overtime.  Do you observe any patterns?

c.   Generate a two-way plot (i.e., plot of two variables) of price and quantity (i.e., units sold) of ZonePerfect Bar. Do you observe any patterns?

Compute the correlation between ZPB’s price and unit sales.

d.   Generate a two-way plot of log price and log quantity of ZonePerfect Bar. Do you observe any patterns?

2.   [4 points] Simple linear regressions

a.   Perform a simple regression of ZPB’s quantity sold on ZPB’sprice.

Discuss the fit of the model using R_squared (or Adjusted R_squared).

b.   Perform a simple regression of ZPB’s log quantity sold on ZPB’s log price. What is the price elasticity of ZPB based on this regression?

Interpret this number.

3.   [8 points] Multivariate log-log regressions

a.   Perform a multivariate regression of ZPB’s log quantity sold on ZPB’s log price, ZPB’s Major Sale, and ZPB’s Minor Sale. What is the price

elasticity of ZPB based on this regression? How is the elasticity different from the one your estimates in 2.b? Briefly explain.

b.   For the regression that you perform in 3.a, interpret the sale coefficients for ZPB’s major sale and minor sale.

c.   Perform a multivariate regression of ZPB’s log quantity sold on ZPB’s log price, ZPB’s Major Sale, ZPB’s Minor Sale, year dummies, competitor products ’ (i.e., Clif and Luna) log prices and promotion events. What is   the price elasticity of ZPB based on this regression specification?  Please report the F-stats for the regression model and provide its implication.

d.   Discuss how the prices and promotions of competitor products influence (or does not influence) ZPB’s unit sold.

Item 2: Preparing a Report to CEO [10 points]

Being able to communicate with multiple stakeholders using data and empirical methods is one of the most important skills of a data scientist. In this exercise, imagine you are a team of data scientists within Abbott Laboratories, the manufacturer of ZonePerfect Bar. Each one of you is responsible for producing an internal analysis report addressed to the company’s CEO about the product. This should be a 1-page memo based on your findings in Item 1. The expectation is that this memo serves as a report to corporate top executives.

Below is atemplate that you can consider using.

---- (start of template)

To: CEO, Abbott Laboratories

From: Data Science Division of Abbott Laboratories

Re: ZonePerfect Bar’s Price and Promotions

Date: (submission date), 2021

Executive Summary

An executive summary should be a paragraph that includes clear statement of the Situation, Questions, Findings, and Recommendations.

Overview

Provide a brief overview and recent performance of the product, including but not limited to the overall trend of units sold and prices overtime.

Questions

Describe the motivations and questions that you are going to address in this report.

Findings and recommendation