What is charged for five pounds of sugar

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Reference no: EM131387760

Question: A food processing organization that sells to retailers 5-pound bags of granulated sugar in the traditional paper packaging is considering also selling the sugar in a hard plastic container with a convenient pour spout. Management commissioned a conjoint study in which 800 homemakers were asked to rank their preferences among a set of alternative 5-pound packages of granulated sugar, each containing different features and prices. A regression analysis was used to determine the results of the study.

Dummy variable coding was used for the additive and packaging variables. The prices of the alternatives in the study ranged from $0.89 to $2.29 and were coded in dollars. The regression coefficients for the study are as follows: Variable Coefficient Presence of additive to prevent clumping 0.58 Presence of plastic container with pour spout 2.73 Price -1.82 Based on these results, calculate the maximum that the food processor could charge retailers for five pounds of sugar packaged with the plastic pour spout container over what is charged for five pounds of sugar in the traditional paper packaging. Assume the retail markup on granulated sugar is 20 percent.

Reference no: EM131387760

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