Regression Analysis on a Boot Manufacturer

Pages: 8 (2231 words) Published: April 10, 2013
Regression Analysis of Army Jackboots

Ochirmunkh Boldbaatar, Myriam Hirscher, Bastian Latz, and Manuel Padutsch

ECON 510
Aun Hassan
November 26, 2012
Introduction

The German company we established the data from sells cloths and shoes. The customers are not private customers but mostly national divisions like the military or fire departments. The company has around 20 stores in Germany; however, the stores have different prices for the same products. The data package we received includes prices and demands for Bergstiefel (Mountain boots) for more than four years, beginning at February 2008, ending in September 2012. As the prices of the Bergstiefel changed almost every month and the prices as well as the quantity demanded is wide-spread we used the regression analysis in order to determine the demand function of the product, the total revenue, and the revenue maximizing optimal price.

Data
The data that are used in this paper have been received from a German career apparel company that is specialized on national divisions like the German Army, the German fire departments, and German state justice. The analyzed data illustrate the quantity and the price to which boots called Bergstiefel have been sold from February 2008 to September 2012. These 56 observations will be used to run a regression analysis. Table 1 shows the quantity of sold Bergstiefel in every month to a certain price. The company has around 20 stores spread out in whole Germany. Caused by different special offers in these branches, the monthly average price that is presented in Table 1 differs almost every month. Another impact for price changes is the launch of new competitive products and derivatives of the Bergsiefel. In the observation period, 14,667 boots have been sold and generated total revenue of around 1.8 million Euro. The lowest quantity sold (62 pairs of boots) can be traced back to the launch of the product in February 2008. Only one month later, a high price reduction led to the highest quantity sold in the observation period (902 pairs of boots). The lowest sales price occurred in March 2008 with an average price of 108.96 EUR. On the other hand, the highest price was 134.50 EUR in February 2010. An annually special seasonal sale brings forth recurrent cutbacks in March. Additional huge price reductions in 10/2011 and 09/2012 can also be put in record. As Figure 1 shows, both the seasonal sales and the additional price reductions boost the number of sold units significantly. In addition, it was possible to get the monthly average purchase price. The purchase price during the observation period was almost constant with 70.40 EUR. Only in the first half-year of 2010, the price differed in a rage from 74.21 EUR to 75.28 EUR. The purchase price is shown as the red line in Figure 1. Figure 1: Price and Quantity of sold Bergstiefel in observation period

Table 1: Data from firm
Date| Price| Quantity| Date| Price| Quantity|
02/2008| € 121.12 | 62| 06/2010| € 130.34 | 124| 03/2008| € 108.96 | 902| 07/2010| € 134.17 | 199| 04/2008| € 116.89 | 394| 08/2010| € 133.61 | 211| 05/2008| € 123.73 | 166| 09/2010| € 128.64 | 258| 06/2008| € 123.22 | 227| 10/2010| € 130.87 | 248| 07/2008| € 125.93 | 215| 11/2010| € 128.76 | 301| 08/2008| € 125.81 | 162| 12/2010| € 132.52 | 233| 09/2008| € 125.38 | 226| 01/2011| € 134.11 | 228| 10/2008| € 124.65 | 216| 02/2011| € 133.72 | 185| 11/2008| € 125.73 | 294| 03/2011| € 117.55 | 717| 12/2008| € 118.64 | 298| 04/2011| € 127.30 | 209| 01/2009| € 127.77 | 196| 05/2011| € 133.76 | 230| 02/2009| € 134.27 | 108| 06/2011| € 133.42 | 187| 03/2009| € 117.35 | 655| 07/2011| € 133.82 | 192| 04/2009| € 131.70 | 252| 08/2011| € 132.33 | 201| 05/2009| € 132.31 | 190| 09/2011| € 125.37 | 265| 06/2009| € 133.32 | 237| 10/2011| €...