Ba ound Pizza One is one of over two dozen pizza parlors in the metropolitan area of Daille, a mid-sized city in the U5. Midwest. Pizza Cine prides itself on being the highest quality pizza in the local market and adverses its fresh ingredients and brick oven cooking process. Fifty percent of Pizza Une's business comes from students at the local university. The restaurant is within one mile from campus, approximately four miles from the city center, and within 1i] miles of i096 of the population of metropolitan Daygille. It competes to some extent with all of the restaurants in Daygille, however, its biggest competitors are Papa's Pizza and Cousin's Pizza. Papa's also makes a high quality piaa and CDmpEE'E with Pizza Cine for higher income locals in Dam'lle. Ililousin's is a much lower quality pizza and attracts much of the college crowd. Management Directives The Board of Pizza Dne wants to evaluate the pricing strategy for onetopping large pizzas and they think varying the price on a regular basis is an unnecessarly hassle. The Board only wants to vary the price for onetopping pizzas based on whether or not the university is in session and whether or not a high-prole sporting event is occurring in a given week. You are given the attached data and variable denitions, along with the knowledge that the rm has $4,003 in weekly fixed costs. 'i'ou are then asked to determine the price of onetopping large pias that will maximize prot under these four combined scenarios. This will require estimating demand and cost functions and making some assumptions. The following issuesfquestions should be addressed within your executive report and presentation. 1. What are your recommended prices for onetopping large piuas {when the university is in and out of session and in weeks with and without highprole sporting events] and what do you expect Pizza Dne's weekly prot to be in these four scenarios? a. If these prices are consistent with historical prices, explain why the board should accept your recommendation of only minor change. b. If these prices are n_ot consistent with historical prices, explain why the board should accept your recommendation of radical change. 2. Explain the process you went through to determine your demand function. a. Provide rationale for each of the variables included in the demand function. b. Explain whether the coefcient estimates are statistically significant and whether the sign on the coefcient estimates are what you expected. 3. Provide rationale for all of the assumptions that were made to determine the appropriate monthly rates. 4. Explain what changes could occur over the next year that would alter your recommended prices. 5. Do you agree with the boards decision to only focus on the price for onetopping large pizzas and to only let this rate vary when the university is in and out of session and in weeks with and without high-prole sporting events? Explain your rationale and provide suggestions if you disagree. Week TVC Q P1 3.338.24 775 3,509.17 808 2.749.09 650 3,067.62 719 3,013.18 711 3,627.08 838 3,102.40 730 3,336.93 793 3,006.67 700 2.501.56 594 +4 4.214.14 950 3.848.02 882 13 3,510.07 814 14 2.549.86 604 15 3,166.31 742 16 +4 3,514.26 811 17 3,793.35 870 18 3,125.07 735 19 3,035.97 716 20 2.912.80 684 21 +4 2,497.10 594 22 2.871.87 675 23 2.963.86 700 24 2,718.91 644 2.324.47 551 26 +4 2,870.02 671 27 2,058.63 486 28 3,209.86 750 29 2.335.76 552 30 +4 2.519.72 589 31 653.51 149 32 2,558.30 601 33 2.351.66 559 34 1,951.06 462 35 2,052.86 489 36 2,099.12 436 37 2.217.25 522 38 2.248.09 533 39 2.168. 16 515 40 2.405.76 566 41 +4 2.239.34 531 42 2.146.71 510 43 1,701.64 402 44 1,749.13 413 45 1,320.19 310 46 2,032.12 481 47 1.248.46 289 48 1,104.30 258 49 729.72 167 50 1,710.34 404 51 1,328.67 312 52 +4 1,815.40 430Q P1 Number of one-topping large pizzas sold at Pizza One in a given week P P1 Average price for one-topping large pizzas sold at Pizza One in a given week P PP Average price for one-topping large pizzas sold at Papa's Pizza in a given week P CP Average price for one-topping large pizzas sold at Cousin's Pizza in a given week Session Binary variable with 1 indicating weeks when the university is in session Weather Number of days in the week with severe weather Unemployment Number of unemployed workers in the state as of the first day of each week Holiday Binary variable with 1 indicating a national holiday in that week Sports Binary variable with 1 indicating weeks with high profile sporting contests (Super Bowl, World Series, etc) TotalAd Amount spent on local advertising each week (in hundreds) Age 65+ Number of residents in Dayville aged 65 years and older (in hundreds) TVC Total Variable Cost - total variable cost associated with the number of pizzas sold each weekSports Age65+ P CP Session Weather Unempl Holiday TotalAd Week Q P1 P P1 P_PP 701 0 16 775 12.00 $ 9.00 $ 5.00 0 66 17 12.00 9.00 5.00 739 808 814 17 650 13.01 11.00 6.00 66 719 3.00 1.00 6.00 880 11.00 6.00 0 881 66 711 13.00 799 838 14.00 11.00 6.00 110 730 14.00 11.00 6.00 1 857 -0 0 0 0 0 0 -0 0 - - 871 28 793 13.01 11.00 6.00 11.00 0 870 24 700 3.00 7.00 0 889 10 27 594 13.00 11.00 6.00 27 950 13.00 2.00 7.00 855 10 24 382 4.00 12.00 6.00 911 110 17 814 14.00 12.00 7.00 894 90 604 1.00 12.00 7.00 10 742 14.00 11.00 7.00 956 7.00 988 811 14.00 12.00 5.00 983 10 13 870 12.00 7.00 SEE 10 21 735 15.00 12.00 7.00 28 716 4.00 11.00 6.00 939 10 948 10 14 684 14.00 11.00 6.00 902 235 594 14.00 11.00 6.00 12.00 6.00 888 235 13 675 4.00 235 700 14.00 12.00 6.00 937 235 14.00 6.00 95 644 12.00 983 235 551 5.00 12.00 6.00 988 235 671 5.00 12.00 6.00 995 235 27 486 15.00 12.00 6.00 - - 191 28 750 15.00 12.00 7.00 961 235 29 12.00 7.00 996 552 15.00 945 201 30 589 15.00 13.00 7.00 149 16.01 7.00 906 31 13.00 136 0 0 0 0 0 0 0 0 0 - 2 0 0 0 0 0 0 0 0 0 0 0 0 6 - - 0 0 0 0 0 0 6 0 0 0 0 - - 32 601 6.00 13.00 7.00 903 889 33 559 6.00 13.00 7.00 831 IN88 8 34 462 16.00 13.00 7.00 35 489 17.00 14.00 8.00 842 .ONNO-NO-S- 36 496 17.00 15.00 8.00 823 522 18.00 15.00 8.00 815 533 8.00 14.00 8.00 805 38 39 515 18.00 15.00 8.00 797 752 231 40 566 18.00 15.00 8.00 15.00 8.00 755 76 41 531 18.01 771 42 510 8.00 15.00 9.00 754 40 43 402 8.00 15.00 9.00 745 40 44 413 8.00 16.00 9.00 737 280 26 45 310 18.00 16.00 9.00 19.00 15.00 9.00 736 11 46 481 740 40 28 47 289 19.00 16.00 9.00 140 24 258 20.00 16.00 9.00 746 48 16.00 9.00 736 282 49 167 20.00 40 25 50 404 16.00 726 19.00 9.00 8.00 725 140 51 312 19.00 15.00 325 140 430 19.00 16.00 8.00