Question Description:


Today is your first day working for JavaMed, a firm that produces and sells a small range of
medical diagnostic products. JavaMed’s main product is the QuickKit™, a simple-to-use test for the rapid diagnosis of Hepatitis C. The test is intended for use by trained personnel in medical facilities, clinical laboratories, emergency care situations, and physicians’ offices as a screening assay capable of providing a result in less than 30 seconds. There is only one competing product in the marketplace, the HepaFind™, which is manufactured by the firm JerryPharma .

Last week, JavaMed’s business analyst, Jo Green, didn’t show up for work. Rumour has it that Jo went to Vegas for the weekend and ended up joining Cirque du Soleil, but nobody really knows. The police have been informed.

Before she disappeared, Jo was working on an important and time-sensitive project for
JavaMed’s CEO, Harry Harrison. The project involves four interrelated tasks:

1. Estimate an empirical demand function for QuickKits™.
2. Interpret the estimated demand function for QuickKits™.
3. Make pertinent recommendations to senior management based on the empirical demand
4. Write a short report summarizing the results of the analysis and any recommendations.

Harry asks you to complete the project. He tells you that he’s particularly interested in knowing
if the current price of the QuickKit™ is optimal and, if not, whether it should be increased or
decreased. He tells you that the current price of a QuickKit™ is $30.00 and that since the
production process has been set up, the marginal cost of producing additional kits is essentially
zero. Harry is also interested in knowing whether or not the firm’s advertizing expenditures
over the last three years have been a good investment and anything else relevant that your
analysis uncovers.

You only have a week to complete the analysis, interpret the results, and summarize your
findings and recommendations in a brief report. Harry tells you that the main body of the
report must be short (a 1000 words at most excluding the title page and any appendices), to
the point, and not overly technical. He tells you that his formal knowledge of mathematics,
economics, and statistics is somewhat limited, and asks you to keep that in mind as you write
the main body of the report. Nevertheless, your conclusions and recommendations must be
based on a rigorous analysis of the available data and you should provide a concise summary of
any technical details in an appendix. Harry also tells you to be explicit about any important
limitations that your analysis might have.

Finally, Harry tells you that he likes his reports to be broken up into sections with sensible and
self-explanatory headings because it makes them much easier to read and understand.
Harry gives you a copy of an Excel spreadsheet that Jo sent him. It contains data that Jo
collected on the variables she thought might have a significant influence on the demand for
QuickKits™. It also contains some notes Jo made about the data and how to proceed with the
analysis. The spreadsheet is the only record of Jo’s work on the project.

Harry has complete confidence in Jo’s technical abilities and professional judgment. As such, he
tells you to take the notes in Jo’s spreadsheet at face value and to use them as a starting point
for your analysis. As Harry puts it, “You’ve only got a week, so there’s no point trying to
reinvent the wheel. If Jo thought the data should be treated in a particular way, then that’s
what you should do.”

Harry wishes you the best of luck and tells you to check with Charlie, his personal assistant,
about how to format the report. When you finally manage to track Charlie down, he tells you to
look at Section 0-8 of the MEQA Study Guide.