Case Report #2
Answers to the questions below should be typed into a word document and uploaded to Isidore by
11:55pm the night before Class #3. Please provide as much detail in your answers as possible. Background
Hotel One is one of the two hotels serving Dayville, a small town in the U.S. Midwest. Fifty percent of its
customers are out-of-town visitors to the local college, thirty percent are visiting Dayville for business
purposes, and the remaining twenty percent of Hotel One’s customers are leisure travelers. The hotel is
within one mile from campus, approximately four miles from the city center, and 8 miles from the
airport. It is easy to reach by car, taxi, or city bus. You are a manager of Hotel One. Your facility consists
of 150 rooms, all of which are standard rooms with two Double Beds. Your only competitor in Dayville,
The Other Hotel, has fewer rooms (100), but 20 of their rooms are luxury suites with King Beds and a
sofa couch (the other 80 are standard rooms with two double beds). This is the extent of the
information provided to you at this point. Assignments
In order to better understand your unit’s operating environment, you are asked to provide your
estimate of the demand equation that would account for various factors that affect your customer
traffic. This will be done by using regression techniques, although you do not, as yet, have any data. The
first step in estimating a demand equation is to determine what variables will be used in the regression.
Please provide detailed answers to the following questions:
1. What do you think should be the dependent variable in your demand equation? What units of
measurement for that variable are you going to adopt? Please provide a detailed explanation for
these choices.
2. Please request information about up to five independent (explanatory) variables for your
demand equation. For each variable you request, (i) provide reasons why you expect it to be
important for your analysis and (ii) explain the expected sign of the relationship between the
proposed independent variable and your proposed dependent variable.
3. Show the exact demand equation you are proposing to estimate.
4. List at least three other variables that you considered as independent (explanatory) variables in
the regression, but chose not to include. Why did you choose not to include them?
ScholarMatic: Explanation & Answer
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