(1) An automotive paints supplier has analysed its warehouse shipments (the volume of paint sent from the warehouse) of four different types of paints to its stores. The warehouse shipments reflect the demand for these different paints. The wholesale prices of the four types of paint are $12, $10, $9, $16 per Gallon (this is how much the paint costs the supplier). The supplier has used a standard mark-up of $3 per gallon to determine the price the stores pay. The supplier analyses the store-level sales data using a semi-log model, with as independent variables the wholesale price and a promotion dummy indicating if a bonus pack was used, which had a 10% larger quantity for the same price. The price coefficient was estimated to be -0.25, the promotion dummy coefficient was 0.10. Both coefficients are statistically significant (p<0.01). What is the price that you recommend for each type of paint?

A. All four paints: $14.

B. All four paints: $20.

C. Paint 1: $16, Paint 2: $14, Paint 3: $13, Paint 4: $20.

D. Paint 1: $15, Paint 2: $13, Paint 3: $12, Paint 4: $19.

(2) An electronics manufacturer has conducted a conjoint choice study into electric toothbrushes, with the features:

-Dynamic Fluid Action for extra cleaning (yes/no)

-Timer to set recommended brush time (yes/no)

-Number of Different Brushing Modes for different styles of brushing (1, 2, 3 or 4)

-Included Number of Different Brush Heads (1, 2 or 3)

-UV Sanitizer for cleaning(yes/no)

A Multinomial logit model is used to analyse the data, with dummy-coding of the attribute levels, using the last level of each attribute as the reference level (indicated with bold and underline above). The estimates are as follows, for each of the levels of each attribute (* indicates statistical significance of an estimated part-utility at p<0.05):

-Dynamic Fluid Action 0.22*

-Timer 0.45*

-Brushing Mode -0.3*, -0.2*, 0.1

-Included Brush Heads -0.1, 0.3*.

-UV Sanitizer -0.2*

Assuming that adding more features (for example 2 brush heads rather than 1) is costly, what is your recommendation for a new electric toothbrush?

A. A tooth brush with Dynamic Fluid Action, a Timer, 4 Brushing Modes, 3 Included Brush Heads, and UV Sanitizer

B. A tooth brush with Dynamic Fluid Action, a Timer, 3 Brushing Modes, 2 Included Brush Heads, and No UV Sanitizer

C. A tooth brush without Dynamic Fluid Action, No Timer, 1 Brushing Mode, 1 Included Brush Head, and no UV Sanitizer

D. A tooth brush with Dynamic Fluid Action, a Timer, 3 Brushing Modes, 1 Included Brush Head, and No UV Sanitizer