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Estimating Cost Functions for Blockbuster and Netflix

Assessment of cost function estimation methods by using the attached Netflix and Blockbuster Financial Data spreadsheet (attached) to develop cost function estimates for both Netflix and Blockbuster using the following methods:

- Account classification
- High-low
- Regression analysis methods

In regards to account classification, high-low, and regression analysis,Which method do you feel best estimates cost functions for both Netflix and Blockbuster? Why?

Which of Netflix's or Blockbuster's costs could be appropriately estimated using the account classification method? Why?

Which of Netflix's or Blockbuster's costs could be appropriately estimated using the high-low method? Why?

Which of Netflix's or Blockbuster's costs could be appropriately estimated using the regression analysis method? Why?

Are there any other methods of estimating cost functions other than the account classification, high-low, and regression analysis methods?

In general, which cost function estimation method is likely to be the best and why? Under what conditions is, or are, the best method(s) inappropriate?

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Solution Summary

I have created some graphs and notes on the tabs, added a regression tab and high-low tab, and given you discussion in a separate word document of 637 words. This is starter material for a longer discussion.

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