Modeling Exercise: Choosing the appropriate variables to include in a model

You are an executive with a pharmaceutical firm, BUG Inc. Your boss, Sal Monella, has given you an analytical task. R&D scientists at BUG have invented a new drug, code named critter. Your task is to help with the decision of either

  1. Drop the product
  2. Go into full scale production

You have made a preliminary list of things that your analysis should perhaps consider. Which of these do you think is not relevant to the decision at hand? Why?

1.      Cost of production facility

2.      Cost of Manufacturing Equipment

3.      Corporate Overhead allocation

4.      Price structure for the product

5.      Cost of Raw Materials

6.      BUGs investment in R&D for critter

7.      Worker recruitment and training costs

8.      Demand forecasts for critter

9.      Your salary

10.  Sales commissions

11.  Distribution costs

12.  Cost of BUG institutional advertising