Start by defining a clear primary metric (e.g., daily profit per shop) and justify why it aligns with the business goal. Then outline a data collection plan that captures key variables, and propose a causal identification strategy using fixed effects and controls to handle confounders. Finally, specify a regression model and a decision rule with guardrails.
Pro tip: Emphasize that you would pre-register your analysis plan and decision rule to avoid p-hacking, and mention that you'd check for heterogeneous treatment effects across days (e.g., exam vs. non-exam) to see if the profit difference is consistent.
Choose daily profit (revenue minus costs) as the primary metric because it directly measures the business outcome. Explain why other metrics like revenue or customer count are insufficient.
Specify the minimum data: daily profit, sales, prices, costs, foot traffic, day of week, exam schedule, promotions, stockouts, and weather. Collect for both shops over 14 days.
Use a difference-in-differences or fixed effects model to control for time-invariant shop characteristics and common time trends. Include day fixed effects to absorb exam weeks and other temporal confounders.
Fit: Profit_it = α + β*Shop_i + γ_t + δ*X_it + ε_it, where Shop_i is a dummy for shop A, γ_t are day fixed effects, and X_it includes controls like price, promotions, stockouts, and foot traffic.
Decide shop A generates more profit if β is positive and statistically significant (p<0.05) and the 95% CI lower bound exceeds a minimum practical effect (e.g., $10/day). Guardrails: exclude days with stockouts >10% or run sensitivity analysis.
AI-generated suggestions, not part of the candidate's original notes. May be inaccurate — verify before relying on them.