The Following Data Show the Demand for an Airline Ticket

question 25

Multiple Choice

The following data show the demand for an airline ticket dependent on the price of this ticket. For the assumed cubic and log-log regression models,Demand = β₀ + β₁Price + β₂Price² + β₃Price³ + ε and ln(Demand) = β₀ + β₁ln(Price) + ε,the following regression results are available. Assuming that the sample correlation coefficient between Demand and = exp(26.3660 - 3.2577 ln(Price) + (0.2071) ²/2) is 0.956,what is the percentage of variations in Demand explained by the log-log regression equation?

• A) 98.52%
• B) 98.50%
• C) 91.39%
• D) 97.93%

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Definitions:

Customer Fill Rate

A measure of the ability of a supply chain to deliver the requested product in the quantity and time agreed upon by the customer.

Safety Inventory

Additional stock that is kept in inventory to protect against uncertainties in demand or supply.

Replenishment Cycles

The process and timing involved in restocking goods or inventory to maintain adequate supply levels.

Cycle Service Level

The probability that a demand during a replenishment cycle will be fully met without stocking out.