Case study: Estimate the demand for Pizza Firm in UAE
This is an individual case study. Read the case carefully use all the information available in the case to answer the given questions. All questions must be answered with proper explanation using theoretical relationship. Student is expected to use Excel Solver to calculate regression equation and the print out of the results to be attached as annexure. Use the results to analyze the case. Submit the case study through turnitin and attach the report. Plagiarism must be less than to be accepted.
Case study: Estimate the demand for Pizza Firm in UAE:
Pizza HUB company in UAE one of the firm which delivers pizza and serves the major towns in UAE. The Manager of the Pizza firm knows that his customers from the cross segments by nationalities ranging from Asian expatriate community, Arab expatriates and other nationalities are rather price-conscious. Cultural factors observed among these nationalities have different characteristics towards buying pizzas, accessibility, occasions, birthday, get together and other important among the youngsters Pizza buyers in UAE pay close attention to the price charged for a home delivered pizza and the price charged by the competitor.
The manager decides to estimate the empirical demand function for the firms Pizza. Manager collects data on the last 24 months of Pizza sales from the records of the company. The details of the data collected are price that is charged for the time period and price charged by competitors. The manager also managed to collect average household income figures from the UAE statistics sources. The other competitor in Pizza range whose price is also collected, other competitors who sells fast food products in the same range is McDonald’s, therefore the manager also got the prices for Big Mac for the last 24 months from the advertisements in old newspapers. He adjusts the price and income data for the effects of inflation by deflating the currency figures using a deflator obtained from the survey of current UAE statistics website. To measure the number of buyers in the market area (N), he collected data on the number of residents in UAE. Since the number of residents had not changed much during the last 24 months, he has dropped N from the specification of the demand.
The data collected is presented below:
Number of months Quantity Prices of M: income Price of competitors Pizza Price of BMac
1 26590 31.57 93.075 38.507 4.56
2 28700 31.57 93440 38.1425 4.927
3 28750 31.57 93805 37.777 5.67
4 28490 31.57 94790.5 37.595 3.98
5 28420 31.57 94790.5 37.595 3.47
6 28160 31.57 94790.5 37.412 3.47
7 30390 27.375 94790.5 37.412 3.10
8 30590 27.375 94717.5 37.047 4.197
9 30400 27.375 94717.5 36.5 4.562
10 30900 27.375 95338 36.5 6.387
11 29340 31.025 95338 37.412 6.387
12 29420 31.025 95338 37.412 6.75
13 28340 31.025 95630 35.587 5.475
14 25170 36.46 96177.5 35.587 4.015
15 25030 36.46 96542.5 35.222 3.832
16 25020 36.46 26350 35.04 4.56
17 25570 37.41 26850 36.64 2.0075
18 25860 37.41 27350 37.376 2.0075
19 26230 37.41 27350 37.23 4.197
20 26330 35.58 27950 36.5 4.197
21 27210 35.58 28159 36.865 2.0075
22 27290 35.58 28264 36.865 2.0075
23 27910 35.58 27444 36.865 4.38
24 28210 35.58 28500 37.41 4.38
From the above data:
1. Explain Fast food buying behavior in UAE? What are the important factors, you observed while buying, influence the purchases among various nationalities in UAE.
2. Establish the regression demand equation to estimate and explain the results after running regression analysis.
3. The manager decides to calculate estimated demand elasticities, observe the results for price elasticity, income elasticity and cross elasticity and explain the results of elasticity under each type of elasticity and the nature of market.
4. How are the competitors Pizza and Big Mac performing in terms of sales?
5. Estimate the demand for Pizza Hub considering price of pizza is raised to AED 33.03, incomes rise to AED 97236, the competitor’s prices rise to 36.938 and price of Big mac is 4.197.
6. Treating the months as time period forecast the demand for the 40th month.