DAVES TRUCK STOP

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DAVES TRUCK STOP
Coaching Notes
BUS 302
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Basic Facts

• Basic Products
• Diesel (truckers)
• Gasoline (tourists - seasonal)
• Meals
• Pricing
• Diesel marked up 1cent per gallon
• Gasoline marked up 1.5 cents per gallon
• Meals average ticket 12.55

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Assignment

• Business Report
• This is a report to Daves management.
• What do you recommend they do?
• What is going well?
• What can be improved?
• How should they price?
• Memo
• Pros and cons of accepting a profit participation
  agreement

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Data

• Data is available at
• http//www.csun.edu/bus302/Course/Materials.html
• While you are asked some specific questions, be
  aware that the data given holds a wealth of
  information.
• Numbers given are in nominal terms
• The appropriate price index for use in
  determining real values is the CPI. This is
  given in the data set.

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Questions

• Question 1 profits over time.
• It might be useful to plot real profits over
  time.
• Question 2 fuel and meal sales demand, three
  simple regressions.
• Own price elasticity -( change in Q/ change
  in Own Price) Number should be calculated at the
  mean sales quantity.

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Question 3 - Elasticities

• The impact of price changes on revenues is linked
  to the price elasticity of demand.
• Is the estimate you have made for the firm or for
  the market?
• The relationship between fuel prices and meals is
  a cross elasticity of demand. You are looking
  for the change in quantity/ change in other
  price (again calculated at the mean quantity).

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Question 4 - profit

• How do additional gasoline (diesel) sales add to
  profits?
• Added gasoline (diesel) revenue?
• Added meals?

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Question 5 - Recommendations

• Recommendations
• Gasoline pricing
• Diesel pricing
• Meals
• Other considerations
• How does each activity add to or detract from
  profits?