APPLICATION OF QUANTITATIVE TECNIQUE

PROJECT ON
RESTAURANT BUSINESS

Burger & More Food Joint

SUBMITTED BY: ROSHAN AGARWAL ROLL NO : 14052 (SECTION A)

ACKNOWLEDGEMENT

The project assigned to me for a good learning package consisting of practicality and etiquettes of corporate world along with fun and excitement. It provided me an opportunity to implement theoretical knowledge into practical and to learn more from it.

It is my great pleasure to express my gratitude to my internal guide Mr. Krishna Murti sir who encouraged, motivated and guided me through out my live project.

METHODOLOGY
Method Application Data Data Analysis Conclusion

TOPICS COVERED
Graph and charts Descriptive statistics Probability Probability Distribution covariance Estimation Hypothesis

METHOD
GRAPH AND CHARTS

HISTOGRAM A Histogram is a graphical display of data using bars of different heights A Frequency Histogram is a special histogram that uses vertical columns to show frequencies (how many times each score occurs) A histogram displays continuous data in ordered columns. Categories are of continuous measure such as time, inches, temperature, etc. Advantages: 1. Visually strong 2. Can compare to normal curve 3. Usually vertical axis is a frequency count of items falling into each category Disadvantages: 1. Cannot read exact values because data is grouped into categories 2. More difficult to compare two data sets 3. Use only with continuous data

LINE CHART A style of chart that is created by connecting a series of data points together with a line. This is the most basic type of chart used in finance and it is generally created by connecting a series of past prices together with a line. A line graph plots continuous data as points and then joins them with a line. Multiple data sets can be graphed together, but a key must be used. Advantages: 1. Can compare multiple continuous data sets easily 2. Interim data can be inferred from graph line Disadvantages: 1. Use only with continuous data

Bar Graph A bar graph displays discrete data in separate columns. A double bar graph can be used to compare two data sets. Categories are considered unordered and can be rearranged alphabetically, by size, etc. Advantages: 1. Visually strong 2. Can easily compare two or three data sets

Disadvantages: 1. Graph categories can be reordered to emphasize certain effects 2. Use only with discrete data

PIE CHART A Pie Chart is a circular Chart divided into sectors, each sector shows the relative size of each value. Advantages: 1. Visually appealing 2. Shows percent of total for each category Disadvantages: 1. No exact numerical data 2. Hard to compare 2 data sets 3. "Other" category can be a problem 4. Total unknown unless specified 5. Best for 3 to 7 categories 6. Use only with discrete data

Burger & More Food Joint

HISTOGRAM
Year 2010 2011 2012 2013 Sales 5000 10000 7000 15000

16000 14000 12000 10000 8000 6000 4000 2000 0 2010 2011 2012 2013 SALES

The histogram tells us about the relationship between the sales and number of years. It is an easy way to check the performance of the restaurant.

LINE CHART
YEAR 2010 2011 2012 2013 Table Service 3000 6000 4000 8000 Take Away 2000 2000 2000 4000 Home Delivery 1000 2000 1000 3000

9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2010 2011 2012 2013 Table Service Take Away Home Delivery

PIE CHART
ITEMS CONSUMPTION IN % BURGERS SANDWICH PASTAS SUBS RAPS 33 20 16 14 17

CONSUMPTION IN %

BURGERS SANDWITCHS PASTAS SUBS RAPS

PIE Chart gives combination was various consumption pattern of customers in the restaurant also it helps the owner to know the demand is more for which type of food.

DATA
Mean, Median and mode
MONTH January February March April May June July August September October November December TOTAL SALES 20000 5000 3000 30000 25000 3000 7000 15000 30000 40000 50000 60000 288000

Standard Deviation and Variance

FOOD ITEMS Burger Sandwich Pasta Subs Raps TOTAL PRICE(X) 120 140 150 160 180 750 X-x -30 -10 0 10 30 TOTAL (x-x)2sq 900 100 0 100 900 2000

Probability
TYPE OF CUSTOMERS Students(S) Couples(C) Family(F) TOTAL FREQUENCY 20 30 50 100 RELATIVE FREQUENCY 0.2 0.3 0.5 1.0

Probability Distribution
The accountant of the restaurant is hoping to receive payments from two outstanding accounts during the current month. He estimates that there is 0.6 probability of receiving rs 15000 due from A and 0.75 probability of receiving rs 40,000 due from B .

BINOMIAL DISTRIBUTION
Customers Frequency (x) (f) 0 4 1 20 2 40 3 40 4 20 5 4 TOTAL 128 Xf 0 20 80 120 80 20 320 D from 2.5 -2.5 -1.5 -0.5 0.5 1.5 2.5 D`(d/0.5) -5 -3 -1 1 3 5 D`*d` 25 9 1 1 9 25 TOTAL Fd`*fd` 100 180 40 40 180 100 640

POISSON DISTRIBUTION
Number of customers dissatisfied with the food in the restaurant Dissatisfied customers 0 1 2 3 4 TOTAL Frequency 109 65 22 3 1 200

ESTIMATION
A random sample of 400 customers was taken to find out the average sales per customers. The sample mean was found to be 900 and standard deviation Rs 200. construct an interval estimation of the population mean with the confidence level of 95.44 per cent.

HYPOTHESIS
A Restaurant has organised its sales department. The following data shown its weekly sales before and after reorganisation. The period for comparison taken from January to March in two successive years. check whether the reorganisation of the sales department of the company has resulted in a significant increase in sales

correlation
Family income and its percentage spend on food in the case of 100 families gave the following frequency distribution.

food percentage Food% 10-15 15-20 20-25 25-30 510 7 3

family income in 000

10-15 4 6 10

15-20 9 12 19

20-25 3 4 5 8

25-30 7 3 -

calculate the coefficient of correlation and interpret the value

DATA ANALYSIS DESCRIPTIVE:

MEAN MEDIAN MODE STANDARD DEVIATION VARIANCE

MEAN The "mean" is the "average" you're used to, where you add up all the numbers and then divide by the number of numbers.

MONTH January February March April May June July August September October November December TOTAL

SALES 20000 5000 3000 30000 25000 3000 7000 15000 30000 40000 50000 60000 288000

Average sales of a restaurant in one year is

Adding all the sum of observation/total number of observation so, 288000/12 = 24000

MEDIAN
The "median" is the "middle" value in the list of numbers. To find the median, your numbers have to be listed in numerical order, so you may have to rewrite your list first .

MONTH January February March April May June July August September October November December TOTAL

SALES 20000 5000 3000 30000 25000 3000 7000 15000 30000 40000 50000 60000 288000

MEDIAN = n+1/2
= 12+1/2 = 6.5 that is 6th and 7th items 6th element= 30000 7th element= 7000 average of 6th and 7th element will give median30000+7000/2

Median= 18500

MODE
The "mode" is the value that occurs most often. If no number is repeated, then there is no mode for the list.

MONTH January February March April May June July August September October November December TOTAL

SALES 20000 5000 3000 30000 25000 3000 7000 15000 30000 40000 50000 60000 288000

There are 12 observations in the series wherein sales of 15000 and 3000 occurs maximum number of times that is 2 therefore, MODE = 15,000 and 3000

STANDARD DEVIATION AND VARIANCE

The Standard Deviation is a measure of how spread out numbers are. Its symbol is (the Greek letter sigma)The formula is easy: it is the square root of the Variance. Variance is defined as The average of the squared differences from the Mean

FOOD ITEMS Burger Sandwich Pasta Subs Raps TOTAL

PRICE(X) 120 140 150 160 180 750

X-x -30 -10 0 10 30 TOTAL

(x-x)2sq 900 100 0 100 900 2000

= sum of all observation/number of observation = 750/5 = 150

Variance = (X-x)2sq/number of observation = 2000/5 = 400

Standard deviation = square root of variance = 20

PROBABILITY
Probability Distribution Binomial Probability Poison Probability Normal Probability

PROBABILITY
How likely something is to happen. Many events can't be predicted with total certainty. The best we can say is how likely they are to happen, using the idea of probability.

TYPE OF CUSTOMERS Students(S) Couples(C) Family(F) TOTAL

FREQUENCY 20 30 50 100

RELATIVE FREQUENCY 0.2 0.3 0.5 1.0

RULE 1: P(S)= 0.2>0 1.0P(C)= 0.3>0 P(F)= 0.5>0

RULE 2: P(S)+P(C)+P(F) = 0.2+0.3+0.5 =

RULE 3: P(S) OR P(C) = 0.2+0.3 = 0.5 P(S) OR P(F) = 0.2+0.5 = 0.7 P(C) OR P(F) = 0.3+0.5 = 0.8

PROBABILITY DISTRIBUTION
A statistical function that describes all the possible values and likelihoods that a random variable can take within a given range. This range will be between the minimum and maximum statistically possible values, but where the possible value is likely to be plotted on the probability distribution depends on a number of factors, including the distributions mean, standard deviation, skewness and kurtosis. EXAMPLE The accountant of the restaurant is hoping to receive payments from two outstanding accounts during the current month. He estimates that there is 0.6 probability of receiving rs 15000 due from A and 0.75 probability of receiving rs 40,000 due from B.

What is the expected cash flow from these two accounts

SOLUTION CALCULATION OF EXPECTED CASH FLOW

ACCOUNT A B

AMOUNT 15,000 40,000 TOTAL EXPECTED VALUE

PROBABILITY 0.60 0.75

AMOUNT(xi) 9000 30000 39,000

IMPORTANCE OF EXPECTED VALUE

The concept of expected value is of considerable importance to management decision making. This is because the criteria in decision problems involving uncertainties are usually the maximisation of expected profits or utility and the minimisation of expected costs. BINOMIAL DISTRIBUTION A probability distribution that summarizes the likelihood that a value will take one of two independent values under a given set of parameters or assumptions. The underlying assumptions of the binomial distribution are that there is only one outcome for each trial, that each trial has the same probability of success and that each trial is mutually exclusive.

NUMBER OF CUSTOMERS IN RESTAURANT IN ONE DAY

Customers (x) 0 1 2 3 4 5 TOTAL Frequency (f) 4 20 40 40 20 4 128 Xf 0 20 80 120 80 20 320 D from 2.5 -2.5 -1.5 -0.5 0.5 1.5 2.5 D`(d/0.5) -5 -3 -1 1 3 5 D`*d` 25 9 1 1 9 25 TOTAL Fd`*fd` 100 180 40 40 180 100 640

Mean = xf/f = 320/128 = 2.5

di= x-mean S.D = (sqfd`*fd`/n)*(c) = (sq 640/128)*0.5 = sq5*0.5 = 1.12

since there are 6 terms n=6-1 = 5 mean = np = 5*0.5 = 2.5 p = 2.5/5 = 0.5 and q = 1-0.5 = 0.5

The calculation of standard deviation by the following formula S.D = sq npq = sq 5*0.5*0.5 = sq5*0.5 = 2.24*0.5 = 1.12

POISSON DISTRIBUTION
A statistical distribution showing the frequency probability of specific events when the average probability of a single occurrence is known. The Poisson distribution is a discrete function.

Number of customers dissatisfied with the food in the restaurant Dissatisfied customers 0 1 2 3 4 TOTAL Frequency 109 65 22 3 1 200

Calculating the theoretical frequency The theoretical expected frequencies are given by the formula N*lambda*2.71828/x! In order to find the value of lambda, we have to calculate the arithmetic mean. Dissatisfied customers(x) 0 1 2 3 4 TOTAL Frequency(f) 109 65 22 3 1 200 fx 0 65 44 9 4 122

Mean = fx/n = 122/200 = 0.61 N*lambda*2.71828/x! = 200*0.61*2.71828/x! = 0.5435

NOW, for each value of x from 0 to 4 we have to calculate the frequency. This is shown below : Dissatisfied customers(x) 0 1 2 3 4 Frequency(f) 200*0.5435 = 108.7 200*0.61*0.5435=66.3 200*0.61*0.61*0.5435/2=20.2 200*0.61*0.61*0.61*0.5435/3*2=4.1 200*0.61*0.61*0.61*0.61*0.5435/24=0.6

ESTIMATION In statistics, estimation refers to the process by which one makes inferences about a population, based on information obtained from a sample. POINT ESTIMATES Approximation of a single quantity or a single numerical value, instead of that of a whole range of quantities or values.

INTERVAL ESTIMATES Statistics an interval within which the true value of a parameter of a population is stated to lie with a predetermined probability on the basis of sampling statistics Compare point estimate

EXAMPLE :
A random sample of 400 customers was taken to find out the average sales per customers. The sample mean was found to be 900 and standard deviation Rs 200. construct an interval estimation of the population mean with the confidence level of 95.44 per cent. SOLUTION Lower point as indicated earlier is x`-z s.d, where s.d = s/sq n where s is the estimate of standard deviation. thus x` -zsd = 900-2(200/sq 400) = 900-2*200/20

= 900-20 = 880 upper point as indicated earlier is x`+zsd = 900+2*(200/sq 400) = 900 + 20 = 920 we are 94.44 per cent confident that the population mean lies between Rs 880 and 920.

HYPOTHESIS
A statistical hypothesis is an assumption about a population parameter. This assumption may or may not be true. Hypothesis testing refers to the formal procedures used by statisticians to accept or reject statistical hypotheses.

Example
A Restaurant has organised its sales department. The following data shown its weekly sales before and after reorganisation. The period for comparison taken from January to March in two successive years. check whether the reorganisation of the sales department of the company has resulted in a significant increase in sales. solution we set up the null hypothesis h0 : the reorganisation of the sales department has not resulted in improved sales h1: the reorganisation of the sales department has resulted in improved sales since the observation are paired together, the pared t test may be applied. for this purpose the t statistics is t = d`/sq (s*s/n), where d=x2-x1

Week no: 1 2 3 4 5 6 7 8 9 10

Sales before reorganisation 12 15 13 11 17 15 10 11 18 19

Sales after reorganisation 16 17 14 13 15 14 12 11 17 22 TOTAL

Deviation d=x2-x1 4 2 1 2 -2 -1 2 0 -1 3 10

Deviation square 16 4 1 4 4 1 4 0 1 9 44

d`=d/n = 10/10 = 1 s*s = 1/10-1(44-10*10/10) = 1/9(440-100/10) = 3.78 t = d`/sq s*s/n = 1/sq(3.78/10) = 1/0.61 = 1.64 CORRELATION Correlation is a statistical technique that can show whether and how strongly pairs of variables are related. For example, height and weight are related; taller people tend to be heavier than shorter people. The relationship isn't perfect. People of the same height vary in weight, and you can easily think of two people you know where the shorter one is heavier than the taller one. Example : Family income and its percentage spend on food in the case of 100 families gave the following frequency distribution.

food percentage Food% 10-15 15-20 20-25 25-30 5-10 7 3 family income in 000 10-15 4 6 10 15-20 9 12 19 20-25 3 4 5 8 25-30 7 3 -

calculate the coefficient of correlation and interpret the value. solution : let us take family income as x variable and expenditure on food percentage as y variable taking the mid values of class interval we have, mid values(x) : 7.5 12.5 17.5 22.5 27.5 mid values(y): 12.5 17.5 22.5 27.5 let ui = (xi-17.5)/5 and vi = (yi-22.5)/5 therefore, different u values are -2 -1 0 1 2 and different v values are -2 -1 0 1

calculation of fu and fu*fu Ui -2 -1 0 1 2 TOTAL fi 10 20 40 20 10 100 fiui -20 -20 0 20 20 0 fiui*fiui 40 20 0 20 40 120

Calculation of fv and fv*fv Vi -2 -1 0 1 TOTAL GIVEN : fuv = -48 r =fuv-fu*fv/N/(sq fu*fu-(fu*fu)/N)*(fv*fv-(fv*fv)/N) r = -48/sq 120 * sq 100 r = -48/10.95* 10 r =0.438 fi 10 20 30 40 100 fivi -20 -20 0 40 0 fivi*fivi 40 20 0 40 100