Rent-A-Car: Demand For “Economy” Vehicles (Statistics Project Sample)
Datasets and description for the case assignments:
- Estimate the demand for “economy” vehicles using variables provided, you might also derive data from other resources and combine with the dataset. Choose the best model.
- Forecast the demand for the “economy” vehicles in Week 30.
- Our customers who choose to keep a car for an extra day are currently paying the same base daily rate. Do you see any potential in exploring alternative schemes? If so, what changes should we implement-shall we change the price for extra days? What considerations are involved in this decision? Provide your thoughts on this issue.
- What other issues or news you would pay attention to adjust your price and managerial strategies?
Demand estimation model selection guidelines
- Find a model with adjusted R-squared above 0.7
- Coefficient for PownE should be negative and significant (|t|>2)
- At least half of the coefficients should bear the correct signs (you should be able to explain the signs) and be statistically significant (|t|>2)
Using the bed tax independent variable in excel results in incorrect values indicated as “LINEST function returns error. Please check input ranges again” and was excluded from the analysis. QE is a proxy for the quantity demanded and is assumed to be the dependent variable in the model (Chulkov & Nizovtsev, 2012). UI estimated the demand using QE as the dependent variable and in the 52nd week this was 81.86609, which is approximately 82.
Forecast the demand for the “economy” vehicles in Week 30.
When considering the number of rental contracts initiated each week in the economy category (QE) as the dependent variable and the number of weeks as the independent variable then and the demand in the 30th week is 90.21, which is approximately 91 using the regression line.
Our customers who choose to keep a car for an extra day are currently paying the same base daily rate. Do you see any potential in exploring alternative schemes? If so, what changes should we implement-shall we change the price for extra days? What considerations are involved in this decision? Provide your thoughts on this issue.
Even as the base daily rate remains the same when customers use extra date the pricing structure needs to break down the base rate for different hours and charge extra day rate when the customers can afford. For instance, the base amount can be for 0- 6 hours, another for 6-12 hours and the third option 12-24 hours. Price competitiveness influence the demand for the services, and passengers using the economy option are more price sensitive to those using the luxury option. As such, the higher price increase is more likely to affect the economy class negatively, and if the competitors offer more attractive prices, the passengers in the economy class are likely to choose the services of such firms. Ideally, decisions on pricing strategies ought to utilize market research to choose attractive and reasonable prices....
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