Project on Diamond Pricing and Projected Sales for Blue Nile, an Online Retailer of Certified Diamonds

BUS 260: Managerial Decision Analysis

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www.bluenile.com

Project on Diamond Pricing and Projected Sales for

Blue Nile, an online retailer of certified diamonds

Objective

• To predict the 2011 quarterly diamond sales of Blue Nile, an online retailer of certified diamonds.

• To test for a linear correlation between the price of a diamond and the four C’s namely Carat, Cut, Color and Clarity.

• To find the best multiple regression equation to determine the price of a diamond.

Introduction

Founded in 1999, Blue Nile has grown to become the largest online retailer of certified diamonds and fine jewelry. The company offers thousands of independently certified diamonds and fine jewelry at prices significantly below traditional retail, with quality standards that are among the highest in the industry. The company has expanded internationally by serving forty countries throughout Europe and Asia-Pacific.

When buying a diamond, it is important to understand a diamond’s quality characteristics. I was quite curious to know about the factors on which the price of a diamond would depend as I am planning to buy one from Blue Nile. And to find the best diamond for your money, requires a delicate balance among the four C’s which are Carat, Cut, Color and Clarity.

Carat:

It is a measure of the diamond weight. One Carat of diamond weight is equivalent to 200 milligrams or 0.2 grams.

Cut:

The cut of a diamond determines its brilliance. The better the cut, the more sparkle it will have. Blue Nile has the following cut grades:

▪ Blue Nile Signature Ideal Cut (Most Brilliant Cut)

▪ Ideal Cut

▪ Very Good Cut

▪ Good Cut

▪ Fair Cut

▪ Poor cut (Blue Nile does not carry diamonds with cut grades of poor)

Color:

A Diamond’s color grade refers to the lack of color. Diamonds that are white,...