Student: Le Nhat Linh of the class IHME

ID: 11202143

Case 1: Pelican Stores 

1. Percent frequency distribution for key variables. 

Type of customer Frequency Percent freq

Promotional 70 70%
Regular 30 30%
Total 100 100%

Method of payment Frequency Percent freq

American express 2 2%
Discover 4 4%
Proprietary Card 70 70%
MasterCard 14 14%
Visa 10 10%
Grand total 100 100%

Gender Frequency Percent freq

Female 93 93%
Male 7 7%
Grand total 100 100%

Martial status Frequency Percent freq

Single 16 16%
Married 84 84%
Grand total 100 100%
2. A bar or pie chart showing the number of customer purchases attributable to
the method of payment. 

NUMBER OF CUSTOMER S
Series1

70
60
50
40 69
30
20
21
10 14
2 4
0
Proprietary American Discover Visa Master card
card express

3. A cross tabulation of type of customer versus Gender, type of customer

versus marital status. Make comments. 

a) Type of customer versus gender

Count of Gender Gender

Type of Customer Female Male Grand Total
Promotional 66,00% 4,00% 70,00%
Regular 27,00% 3,00% 30,00%
Total 93,00% 7,00% 100,00%

The majority of customers are female and they are mostly promotional customers. In
this scenario, the quantity of male customers is insufficient to determine if the
promotion plan is effective.

b) Type of customer versus marital status

Count of Type of Customer Marital status  

Type of Customer Married Single Total
Promotional 61,00% 9,00% 70,00%
Regular 23,00% 7,00% 30,00%
Total 84,00% 16,00% 100,00%
The majority of Pelican's clients (84 percent) are married, and the advertising plan is
based on this.

4. Histograms to explore the distribution of Net sales and Age of customers. 

a) Net sales

Min 13,23 
Max 287,59 
Range 10-290 
Interval 14 
Interval wiedth 20 

Bin Frequency 
30 13 
50 26 
70 20 
90 12 
110 9 
130 6 
150 4 
170 3 
190 1 
210 2 
230 1 
250 0 
270 2 
290 1 
More 0 
 net sales
30 120.00%
25 100.00%
20 80.00% Frequency
Cumulative %
15 60.00%
10 40.00%
5 20.00%
0 0.00%
30 50 70 90 110 130 150 170 190 210 230 250 270 290 More

b) Age of customer

Min 20,00 
Max 78,00 
Range 20-80 
Interval 6 
Interval wiedth 10 

Bin Frequency 
30 18 
40 26 
50 32 
60 15 
70 6 
80 3 
More 0 
 Cus tom er 's age
35 120.00%

30 100.00%
25
80.00% Frequency
20 Cumulative %
60.00%
15
40.00%
10

5 20.00%

0 0.00%
30 40 50 60 70 80 More

5. A scatter diagram to explore the relationship between net sales and customer
age. Produce covariance and correlation matrix to support the scatter
diagram. 

90
80
70
60
50
40 Age
30
20
10
0
0.00 50.00 100.00 150.00 200.00 250.00 300.00 350.00

Covariance : -7,334889
Correlation : -0,010636

There appears to be no association between age and net sales based on the scatter
plot.

6. Produce the confidence intervals for mean Age and mean Net

sales. Interpret the results. 

* Confidence interval for mean Age :

 Mean Age : 43,08
Z0.025 = 1.96
Sd : 12,39

We have: 40.65<u<45.5
*Confidence interval for mean Netsales :
Mean Net sales : 77,6
Z0.025 = 1.96
Sd :55,66
We have: 66.68<u<88.52

7. Do the appropriate tests to compare the mean Net sales of single and married
customers, the mean Age of Regular and Promotional customers. State the
necessary assumptions.    
 
*Compare the mean Netsales of single and married customers.

Independent Samples Test

  Levene's Test for Equality of Variances

 
   
    F Sig.
Equal variances ,747 ,389
Value assumed
Equal variances not    
assumed

The first result is F-test for equal variance: Ho: two variances are equal; H1: Not equal
F has p-value=0.389 > 0.05, then do not reject, means equal variance
Then we only look at the first line of the result that corresponds equal variance case.
Ho: µ1= µ2; H1: µ1# µ2
On this line, t=0.176, having p-value=0.861>0.05, then do not reject Ho, means two
mean Net sales of single and maried are equal

*Compare the mean Age of regular and promotional customers

 Independent Samples Test

  Levene's Test for Equality of Variances

 
   
    F Sig.
Equal variances ,245 ,622
Value assumed
Equal variances not    
assumed

The first result is F-test for equal variance:

Ho: two variances are equal; H1: two variances are not equal
F has a p-value of 0.622 > 0.05, and do not reject it; this suggests equal variance.
Then we only look at the first line of the result that corresponds equal variance case.
Ho: µ1= µ2; H1: µ1# µ2
On this line, t=0.217, having p-value=0.828>0.05, then do not reject Ho, means
two mean Age of promotional and Regular customers are equal.

Case 2: Specialty Toys 

1. Use the sales forecaster’s prediction to describe a normal probability
distribution that can be used to approximate the demand distribution. Sketch
the distribution and show its mean and standard deviation. 
From the case, we can know：

-The demand distribution can approximate a normal probability distribution.

-An expected demand of 20,000 units with a 0.9 probability that demand would be
between 10,000 units and 30,000 units.

Let X be the demand for the toy . X follows normal distribution with the mean
μ = 20000 and standard deviation σ.
We have P(10000<X<30000) =0.9
=> P((10000-20000)/σ < (X-20000)/σ < (30000-20000)/σ) = 0.9
=> 2 P(Z<10000/σ) =1.9
=> P(Z<10000/σ) =0.95
Using the standard normal probability table, we see that the standard normal
random variable z=1.65 when P (z = 1.65) = 0.95
To calculate for σ: at x= 30000; x= (30000-20000)/1.65= 6061

2. Compute the probability of stock-out for the order quantities suggested by

members of management team. 
Let the demand denoted by D ~ N ( 20000,60612)

A) If Quantity = 15000

Z = (15000-20000)/6061 = -0.82

P(Z ≥ -0.82)= 0,7939

B) Q = 18000

P(X ≥ 18000) = 0.6293

C) Q = 24000
P(X ≥ 24000) = 0,2546

D) Q = 28000

P (X ≥ 28000) = 0.0934

3. Compute the projected profit for the order quantities suggested by

management team under three scenarios: Worst case in which sales =10000
units, most likely case in which sales =20000 units and best case in which
sales =30000 units. 
a) Worst case in which sales =10000 units:
 Order 15000 units : Profit = (24-16)*10000 – (16-5)*5000 =25000
 18000 units : Profit = -8000
 24000 units : Profit = -74000
 28000 units : Profit = -118000

b) Most likely case in which sales = 20000 units

 Order 15000 units : Profit =120000
 18000 units : Profit =144000
  24000 units : Profit =116000
 28000 units: Profit =72000

c) Best case in which sales =30000 units

 Order 15000 units : Profit =120000
 18000 units: Profit =144000
 24000 units: Profit =192000
 28000 units: Profit =224000

4. One of Specialty’s managers felt that the profit potential was so great that the
order quantity should have a 70% chance of meeting demand and only a 30%
chance of any stock-outs. What quantity should be ordered under this policy,
and what is the projected profit under the three sales scenarios. 

Let the order quantity be X1

We have to find X1 such that : P(X> X1)=0.3 and P(X<X1) =0.7
=> P( Z > (X1-20000)/6061) =0.3
=> P( Z <(X1-20000)/6061) = 0.7
=> X1-20000/6061 = 0.5244
=> X1 = 23178
 Sale 10000 units : Profit = (24-16)x10000 –(16-5)x13178 = -64958
 20000 units : Profit = ( 24-16) x20000 –(16-5)x3178 =125042
 30000 units : Profit =(24-16) x23178 =185424

5. Provide your own recommendation for an order quantity and note the
associated profit projections. Provide the rationale for your recommendation.

From my view, the order quantity should be 20000 with a profit because when
compared to the other order quantities, this appears to be the most beneficial in
terms of both profit and loss.