Demand Forecast
• Scenario – FlyHigh airlines is test marketing their boxed snacks sold on their short flights. FlyHigh selected 15 different markets for a quarter-long sales test. For the entire quarter, the boxed snack was sold onboard at 4 different prices starting at $8.50 a box. Data was collected on the average income of the passenger aboard the flights. Data was also collected that represented a snack purchased off-board (presumably in the airport) and carried on by the passenger. The amount of passengers that this boxed snack was available to and the ultimate quantity sold was also collected.
• Forecast Data Download Forecast Data
Answer the following in your Forecast and Recommendation:
• What is your selected linear demand function given the variables presented? (hint: Qd = x + y + z + q….)
• What is the estimated linear demand function (Q = ….)?
• What percentage of the variation in sales (Q) is explained by the demand function?
• What if the price of the boxed lunch sold on board was increased by $2?
• If a typical market sold a boxed snack at $8.75, their average income was $80,378, the off-board priced snack was $7.50, and the population was 6,378, what is the expected sales?
• Given this information, as a manager, make a recommendation to FlyHigh airlines on the price of their boxed snacks.
