Statistical Methods for

Decision Making

Name: Sweta Kumari

PGP-DSBA Online July’ 21
Date: 23/06/2022

0
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 Table of Contents
Problem Statement 1 : 4
1)Find mean cold storage temperature for Summer, Winter, and Rainy Season ……………………………………………….……4.
2) Find the overall mean for the full year……………………………………………………………………………………………………...…………7.
3)Find Standard Deviation for the full year...........................................................................................................…….7
4)Assume Normal distribution, what is the probability of temperature having fallen below 2º C?.....................…….7
5) Assume Normal distribution, what is the probability of temperature having gone above 4º C ?............................8.
6) What will be the penalty for the AMC Company?.....................................................................................................8

Problem Statement 2 - 8
2.1) Which Hypothesis test shall be performed to check if corrective action is needed at the cold storage plant?
Justify your answer…………………………………………………………………………………………………………………………………………………..11
2.2) State the Hypothesis and do the necessary calculations to accept or reject the corresponding null hypothesis…12
2.3) Give your inference……………………………………………………………………………………………………………………………………………12
List of Figure

Figure 1: Hist Plot for Problem Statement 1

Figure 2: Box Plot for Date for Problem Statement 1
Figure 3: Box Plot for Temperature for Problem Statement 1 06
Figure 4: Hist Plot for Problem statement 2 10
Figure 5: Box Plot for Date for Problem Statement 2
Figure 6 : Box Plot for Date for Problem Statement 211
Problem Statement 1:
Problem Statement
Cold Storage started its operations in Jan 2016. They are in the business of storing Pasteurized Fresh Whole or
Skimmed Milk, Sweet Cream, Flavoured Milk Drinks. To ensure that there is no change of texture, body appearance,
separation of fats the optimal temperature to be maintained is between 2º - 4º C. In this problem statement we will
explore the different
In the first year of business, they outsourced the plant maintenance work to a professional company with stiff
penalty clauses. It was agreed that if it was statistically proven that the probability of temperature going outside the
2º - 4º C during the one-year contract was above 2.5% and less than 5% then the penalty would be 10% of AMC
(annual maintenance case). In case it exceeded 5% then the penalty would be 25% of the AMC fee.

There might be change in the output number in the Jupiter notebook as I had to fix the code in the end so had to
run the entire code at end.

Question 1: 1. Find mean cold storage temperature for Summer, Winter, and Rainy Season. (7 marks)
Ans : We will create the Dataframe for the dataset of the cold storage as df then we will make analysis out of it .

Checking top 5 records:

Checking bottom 5 records:

Shape of the dataset :
Shape of dataset is (365, 4)
 The number of rows is 365
 The number of columns is 4

Datatype of dataset:
Season object
Month object
Date int64
Temperature float64
dtype: object

Checking duplicate values in the dataset:

Checking information about the dataset:

Description about the dataset:

Histplot :

Fig1- Hist plot for problem statement 1

Box plot for Date:

Fig 2: Box plot for Date for Problem Statement 1

Box Plot for Temperature:

Fig 3: Box plot for Date for Problem Statement 1

Mean of Summer ,Rainy and Winter Season:

Whole description about the all the three seasons:

Question 2 . Find the overall mean for the full year. (7 marks)
Ans : Overall Mean = (Sum of all temperature / Count of temperature)

Using Python let’s find out the overall mean :

Question 3. Find Standard Deviation for the full year. (7 marks)

Ans : To define standard deviation, you need to define another term called variance. In simple terms, standard
deviation is the square root of variance.

Question 4. Assume Normal distribution, what is the probability of temperature having fallen below 2o C? (7
marks)
Ans: Normal distribution, also known as the Gaussian distribution, is a probability distribution that is symmetric
about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.
In graph form, normal distribution will appear as a bell curve .

Question 5 : Assume Normal distribution, what is the probability of temperature having gone above 4o C? (7
marks).

Ans :

Question 6. What will be the penalty for the AMC Company? (5 marks)
Ans : The original clause states that if it is statistically proven that the probability of mean temperature outside 2-4 C
is between 2.5% and 5%, then the penalty would be 10% of AMC.

Here, assuming that both the events i.e. probability of mean temperature above 4 C and below 2 C are discrete
events, the joint probability of mean temperature not falling in 2-4 C will be the sum total of probabilities in each
case.

Or approx. 3.18%

Since the probability does not go beyond 5 % of the mean temperature; Penalty would be calculated @ 10.0 % of the
AMC

Problem Statement 2
Problem Statement
In Mar 2018, Cold Storage started getting complaints from their clients that they have been getting complaints from
end consumers of the dairy products going sour and often smelling. On getting these complaints, the supervisor pulls
out data of the last 35 days’ temperatures. As a safety measure, the Supervisor has been vigilant to maintain the
mean temperature 3.9º C or below. Assume 3.9º C as the upper acceptable mean temperature and at alpha = 0.1 do
you feel that there is a need for some corrective action in the Cold Storage Plant or is it that the problem is from the
procurement side from where Cold Storage is getting the Dairy Products. The data of the last 35 days is in
“Cold_Storage_Mar2018_.csv”

Let’s do initial analysis for further proceeding ahead :

Checking top 5 record:

Checking bottom 5 Record:

Shape of the dataset :

 The number of rows is 35
 The number of columns is 4

Checking datatype of the dataset:

Season object
Month object
Date int64
Temperature float64
dtype: object

Information about the dataset :

Descriptive Summary about the dataset :

Checking Null Value for the dataset:

Hist Plot :

Fig 4: Hist plot for Problem Statement 2

Box plot for Date :

 Fig 5: Box plot for Date for Problem Statement 2
Box plot for Temperature :

Fig 6:Box plot for Date for Problem Statement

Question 2.1 Which Hypothesis test shall be performed to check if corrective action is needed at the cold storage
plant? Justify your answer. (6 marks)

Ans:
 Hypothesis testing is a form of statistical inference that uses data from a sample to draw conclusions about
a population parameter or a population probability distribution. First, a tentative assumption is made
about the parameter or distribution. This assumption is called the null hypothesis and is denoted by H 0.
 In a Hypothesis test scenario, if the sample mean is largely representative of the population mean, then we
use a One-tailed T-Test. When the testing is done to show that the sample mean would be higher or lower
than the population mean, it is referred to as a one-tailed test. (The basis assumption of Normal distribution
of data, however, is necessary).
 For determining this, we require a Null & Alternate Hypothesis to be determined before carrying out such
test. In this case, the supervisor needs to understand if the mean temperature of last 35 days falls below 3.9
C or not, hence in this case, a one tailed t-test would be the best suited, since the test is largely towards one
side of the data or towards single tail.

Question 2.2 State the Hypothesis and do the necessary calculations to accept or reject the corresponding null
hypothesis. (8 marks)
Ans : Hypothesis testing is a form of statistical inference that uses data from a sample to draw conclusions about a
population parameter or a population probability distribution. First, a tentative assumption is made about the
parameter or distribution. This assumption is called the null hypothesis and is denoted by H 0.
We now state the Null & Alternate Hypothesis for the case in question.
Null Hypothesis, H0: Mu<=3.9 C
Alternate Hypothesis, Ha: Mu>3.9 C

In this case, we will reject the Null Hypothesis if the mean temperature is found to be above 3.9 C and the supervisor
would then initiate an inquiry into the procurement side of the supply chain

P value is less than alpha .

Hence , Alternate Hypothesis is true.

Question 2.3 Give your inference. (6 marks)

Ans :
 T test shows we Null Hypothesis is Rejected, and alternate hypothesis is true so decision should be there is
need for some corrective action in the Cold Storage Plant
 From the above Hypothesis we can conclude no corrective action is required as the supervisor has
maintained the mean temperature below 3.9º C the problem is from the procurement side from where Cold
Storage is getting the Dairy Products. And hence, the corrective action at the procurement side needed to be
taken to avoid further complaints.