BUSINESS REPORT

Statistical Methods for Decision Making Project

PGP-DSBA Online
Athisya Nadar
9th May 2021

GREAT LEARNING Athisya@gmail.com

 Table of Contents
Wholesale Customers Analysis ...................................................................................................... 3
Q1.1 .................................................................................................................................................................. 4
Q1.2 .................................................................................................................................................................. 6
Q1.3 .................................................................................................................................................................. 9
Q1.4 ................................................................................................................................................................ 13
Q1.5 ................................................................................................................................................................ 14

Clear Mountain State University (CMSU) survey ................................................................... 15

Q2.1.1 ............................................................................................................................................................. 15
Q2.1.2 ............................................................................................................................................................. 16
Q2.1.3 ............................................................................................................................................................. 16
Q2.1.4 ............................................................................................................................................................. 17
Q2.2.1 ............................................................................................................................................................. 17
Q2.2.2 ............................................................................................................................................................. 17
Q2.3.1 ............................................................................................................................................................. 17
Q2.3.2 ............................................................................................................................................................. 18
Q2.4.1 ............................................................................................................................................................. 19
Q2.4.2 ............................................................................................................................................................. 19
Q2.5.1 ............................................................................................................................................................. 19
Q2.5.2 ............................................................................................................................................................. 19
Q2.6 ................................................................................................................................................................ 20
Q2.7.1 ............................................................................................................................................................. 20
Q2.7.2 ............................................................................................................................................................. 20
Q2.8.1 ............................................................................................................................................................. 21
Q2.8.2 ............................................................................................................................................................. 22

ABC asphalt shingles ......................................................................................................................... 23

Q3.1 ................................................................................................................................................................ 23
Q3.2 ................................................................................................................................................................ 24

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 WHOLESALE CUSTOMERS ANALYSIS
A wholesale distributor operating in different regions of Portugal has
information on annual spending of several items in their stores across
different regions and channels. The data consists of 440 large retailers’ annual
spending on 6 different varieties of products in 3 different regions (Lisbon,
Oporto, Other) and across different sales channel (Hotel, Retail).

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1.1 USE METHODS OF DESCRIPTIVE STATISTICS TO SUMMARIZE DATA.

WHICH REGION AND WHICH CHANNEL SPENT THE MOST?

WHICH REGION AND WHICH CHANNEL SPENT THE LEAST?

Descriptive statistics is concerned with Data Summarization Graphs/Charts and tables. The methods
of descriptive statics include Distribution, which deals with each value's frequency, Measures of
Central Tendency and Measures of variability. The most widely used measures of central tendency is
Arithmetic Mean, Median, and Mode.

Mean is defined as the arithmetic average of all observations in the data set.
Median is defined as the middle value in the data set arranged in ascending or descending order.
Mode is defined as the most frequently occurring value in the distribution; it has the largest frequency.

Measures of Dispersion include Range, IQR, Standard Deviation

Range is the simplest of all measures of dispersion. It is calculated as the difference between
maximum and minimum value in the data set.
Inter-Quartile Range (IQR) is computed on middle 50% of the observations after eliminating the
highest and lowest 25% of observations in a data set that is arranged in ascending order. IQR is less
affected by outliers.
Standard deviation is the square root of variance in simple words

The table below shows the description of the Wholesale customer dataset:

In the table below we can see some sample records which has 2 categorical variable and 6
numerical variables. The data consists of 440 large retailers’ annual spending on 6 different
varieties of products in 3 different regions (Lisbon, Oporto, Other) and across different sales
channel (Hotel, Retail).

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The Region that has spent the most is Other(10677599) and the region that has
spent the least is Oporto(1555088).
The Channel that has spent the most is Hotel(7999569) and the channel that has
spent the least is Retail(6619931).
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Figure 1

1.2 There are 6 different varieties of items that are considered.

Describe and comment/explain all the varieties across Region and Channel?
Provide a detailed justification for your answer.

When we sum up the spending across each channel and region, we get the total spending
across each channel and region in the following table. the 6 different varieties of items which
include Fresh, Milk, grocery, frozen, detergent paper, delicatessen spending can be further
summarized in the bar graph

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From the above graph, we can see that at Lisbon most spent product are Fresh products and
the least spent product is Delicatessen. At Oporto, the most spent product are Fresh products
and least spent products are Delicatessen. In other category, the most spent product are Fresh
products and least spent product are Delicatessen

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The above graph clearly shows that the most spent product in retail category is Grocery
products and least spent product in retail category is the Frozen food products. In Hotel
category the most spent product is the Fresh products and least spent product is the
Detergents paper

1.3 On the basis of a descriptive measure of variability,

which item shows the most inconsistent behavior?
Which items show the least inconsistent behavior?

The common descriptive measures of variability are the range, IQR, variance, and standard
deviation. To check the inconsistent behavior of an item we can calculate the coefficient of
variation of each of the variable. The following pie chart explains how each of the item has
performed across the 3 different locations Lisbon, Oporto and other against both retail and
hotel category.

This table shows that coefficient of variance of Fresh products is 105.25% while that of
Delicatessen is 184.42%. Therefore, Fresh products show the most inconsistent behavior and
Delicatessen shows the least inconsistent behavior

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This pair plot helps us to understand the relationship between the 6 food items.

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1.4 Are there any outliers in the data? Back up your answer with a suitable plot/technique with
the help of detailed comments.

From this Boxplot, we can clearly see that all the 6 items have outliers

Outliers are observations in a dataset that don’t fit in some way. Perhaps the most common or
familiar type of outlier is the observations that are far from the rest of the observations or the
center of mass of observations. Outliers can skew statistical measures and data distributions,
providing a misleading representation of the underlying data and relationships. Removing
outliers from data prior to modeling can result in a better fit of the data and, in turn, more
skillful predictions.

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1.5 On the basis of your analysis, what are your recommendations for the business? How can
your analysis help the business to solve its problem? Answer from the business
perspective

From this analysis we can conclude that:

(1) When we calculate total, the business spends the most on fresh products across different
channels and different regions, so the company needs to ensure that it is driving the most
profit from this food item.
(2) Since the Delicatessen show the least inconsistent behavior, the business should invest
more in this food item because it is less risky
(3 )Fresh products require more spending, to cut cost the wholesale distributor can
concentrate more on other food items like Milk, Grocery, Frozen, Detergents paper and
Delicatessen

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PROBLEM 2
THE STUDENT NEWS SERVICE AT CLEAR MOUNTAIN STATE UNIVERSITY
(CMSU) HAS DECIDED TO GATHER DATA ABOUT THE UNDERGRADUATE
STUDENTS THAT ATTEND CMSU. CMSU CREATES AND DISTRIBUTES A
SURVEY OF 14 QUESTIONS AND RECEIVES RESPONSES FROM 62
UNDERGRADUATES (STORED IN THE SURVEY DATA SET).

2.1. For this data, construct the following contingency tables (Keep Gender as row variable)
2.1.1. Gender and Major

From the 62 students total, 33 are female and 29 are male.

The following table shows the number of males and females against each major.

Gender Major

Female Accounting 3

CIS 3

Economics/Finance 7

International Business 4

Management 4

Other 3

Retailing/Marketing 9

Male Accounting 4

CIS 1

Economics/Finance 4

International Business 2

Management 6

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 Other 4

Retailing/Marketing 5

Undecided 3

2.1.2. Gender and Grad Intention

The following table shows the number of male and female against whether they intent to
graduate or no along with some who are undecided

Gender Grad Intention

Female No 9

Undecided 13

Yes 11

Male No 3

Undecided 9

Yes 17

2.1.3. Gender and Employment

The following table displays the employment status with the number of males and females for
each type of employment.

Gender Employment

Female Full-Time 3

Part-Time 24

Unemployed 6

Male Full-Time 7

Part-Time 19

Unemployed 3

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2.1.4. Gender and Computer

The following table show the number of male and female students who use tablet, laptop or
desktop.

Gender Computer

Female Desktop 2

Laptop 29

Tablet 2

Male Desktop 3

Laptop 26

2.2. Assume that the sample is representative of the population of CMSU. Based on the data,
answer the following question:

2.2.1. What is the probability that a randomly selected CMSU student will be male?

Probability of male student = number of male student/total number of students=29/62 =

0.46774193548387094

The probability that a randomly selected CMSU student will be male is 0.46774193548387094

2.2.2. What is the probability that a randomly selected CMSU student will be female?

Probability of female student = number of female student /total number of students=33/62 =

0.532258064516129

The probability that a randomly selected CMSU student will be female is 0.532258064516129

2.3. Assume that the sample is representative of the population of CMSU. Based on the data,
answer the following question:

2.3.1. Find the conditional probability of different majors among the male students in CMSU.

The following table shows the conditional probability of different majors among the male students in
CMSU which is calculated by number of male students in accounting, CIS, economics/finance,
international business, management, other, Retailing/Marketing ,undecided/total number of male
students

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 male_prob
Gender

Major

Accounting 4 0.137931

CIS 1 0.034483

Economics/Finance 4 0.137931

International Business 2 0.068966

Management 6 0.206897

Other 4 0.137931

Retailing/Marketing 5 0.172414

Undecided 3 0.103448

2.3.2 Find the conditional probability of different majors among the female students of CMSU.
The following table show the conditional probability of different majors among the female students of
CMSU which is calculated by number of females in accounting, CIS, economics/finance, international
business, management, other/total number of female students

Gender female_prob

Major

Accounting 3 0.090909

CIS 3 0.090909

Economics/Finance 7 0.212121

International Business 4 0.121212

Management 4 0.121212

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 Other 3 0.090909

Retailing/Marketing 9 0.272727

2.4. Assume that the sample is a representative of the population of CMSU. Based on the data,
answer the following question:

2.4.1. Find the probability That a randomly chosen student is a male and intends to graduate.

probability That a randomly chosen student is a male and intends to graduate = number of male
students who intends to graduate/total number of students=17/62

Probability that a randomly chosen student is a male and intends to graduate is

0.27419354838709675

2.4.2 Find the probability that a randomly selected student is a female and does NOT have a
laptop.

probability that a randomly selected student is a female and does NOT have a laptop = number of
female students without laptop/total number of students=4/62

Probability that a randomly chosen student is a female and does not have a laptop is
0.06451612903225806

2.5. Assume that the sample is representative of the population of CMSU. Based on the data,
answer the following question:

2.5.1. Find the probability that a randomly chosen student is a male or has full-time
employment?

probability that a randomly chosen student is a male or has full-time employment = number of male
students or students who have full time employment/total number of students=32/62

Probability that a randomly chosen student is a male or has full time empl
oyment is 0.5161290322580645

2.5.2. Find the conditional probability that given a female student is randomly chosen, she is
majoring in international business or management.

conditional probability that given a female student is randomly chosen, she is majoring in international
business or management= number of female student from international business or
management/total number of female students=8/33

Probability that a randomly chosen student is female and has Major in Management or International
Business 0.24242424242424243

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2.6. Construct a contingency table of Gender and Intent to Graduate at 2 levels (Yes/No). The
Undecided students are not considered now and the table is a 2x2 table. Do you think the
graduate intention and being female are independent events?

yes no

male 17 3

female 11 9

Two events A and B are said to be independent if the fact that one event has occurred does not
affect the probability that the other event will occur. We can see out of 29 male, 17 intent to graduate
and out of 33 female only 11 intent to graduate.

Events A and B are independent if the equation P(A∩B) = P(A) · P(B) holds true.

P(female) = 33/62 = 0.532258064516129

P(intent to graduate) =28/62 = 0.45161290322580644
P(female & intent to graduate) =11/62 = 0.1774193548387097

P(female) * P(intent to graduate) =0.532258064516129*0.45161290322580644

=0.24037460978147762

P(female) * P(intent to graduate) not equal to P(female & intent to graduate)

Hence, the graduate intention and being female are dependent events

2.7. Note that there are four numerical (continuous) variables in the data set, GPA, Salary,
Spending, and Text Messages.

Answer the following questions based on the data

2.7.1. If a student is chosen randomly, what is the probability that his/her GPA is less than 3?

Probability that a randomly chosen student's GPA is less than 3 = number of students with GPA less
than 3/total number of students=17/62

Probability that a randomly chosen student's GPA is less than 3 is 0.27419354838709675

2.7.2. Find the conditional probability that a randomly selected male earns 50 or more. Find
the conditional probability that a randomly selected female earns 50 or more.

Probability that a randomly selected male earns more than 50 = number male students who earns 50
or more/total number of male=14/29

Probability that a randomly selected male earns more than 50 is 0.4827586206896552

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Probability that a randomly selected Female earns more than 50 = number of females earning 50 or
more/number of females=18/33

Probability that a randomly selected Female earns more than 50 is 0.5454545454545454

2.8.1 Note that there are four numerical (continuous) variables in the data set, GPA, Salary,
Spending and Text Messages. For each of them comment whether they follow a normal
distribution.

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And to confirm whether these four data sets are following normal distribution or not, we done the
Shapiro–Wilk test and the output from Python we got –
ShapiroResult for GPA(statistics=0.994, p=0.987)
p-value is more than 0.05
ShapiroResult for Salary(statistics=0.971, p=0.147)
p-value is more than 0.05
ShapiroResult for Spending(statistics=0.984, p=0.589)
p-value is more than 0.05
ShapiroResult for Text Messages(statistics=0.980, p=0.408)
p-value is more than 0.05

By these details we confirm that out of the given four data sets ‘GPA’ ,‘Salary’ , Spending’ and ‘Text
Messages’ are following normal distribution.

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2.8.2 Write a note summarizing your conclusions for this whole Problem 2.

From this analysis, we can conclude that the sample survey conducted for the students from central
Missouri state university shows that there are multiple factors that affect the graduation of a student.
The survey conducted by Student News Service at Clear Mountain State University (CMSU) has
information about what major the undergrad students are pursuing, whether they intent to graduate,
what is their GPA, nature of their employment and their salary, social networking, spending,
satisfaction, computer and text messages. Using our analysis, we have constructed contingency
tables and calculated probabilities between these variables. We can conclude that in order to help
students graduate and find suitable employment the university can work on improving the
infrastructure by providing easy access to computers and conducting social networking events. The
probabilities of male students graduating is more than that of female students, so female students
need more support and choice of major.

Problem 3

An important quality characteristic used by the manufacturers of ABC asphalt

shingles is the amount of moisture the shingles contain when they are
packaged. Customers may feel that they have purchased a product lacking in
quality if they find moisture and wet shingles inside the packaging. In some
cases, excessive moisture can cause the granules attached to the shingles for
texture and coloring purposes to fall off the shingles resulting in appearance
problems. To monitor the amount of moisture present, the company conducts
moisture tests. A shingle is weighed and then dried. The shingle is then
reweighed, and based on the amount of moisture taken out of the product, the
pounds of moisture per 100 square feet is calculated. The company would like to
show that the mean moisture content is less than 0.35 pound per 100 square
feet.

The file (A & B shingles.csv) includes 36 measurements (in pounds per 100
square feet) for A shingles and 31 for B shingles.

3.1 Do you think there is evidence that means moisture contents in both types of shingles are
within the permissible limits? State your conclusions clearly showing all steps.

One sample t testt statistic: -1.4735046253382782

p value: 0.07477633144907513

Since pvalue > 0.05, do not reject H0 .

There is not enough evidence to conclude that the mean moisture content for Sample A shingles is
less than 0.35 pounds per 100 square feet. p-value = 0.0748. If the population mean moisture
content is in fact no less than 0.35 pounds per 100 square feet, the probability of observing a sample
of 36 shingles that will result in a sample mean moisture content of 0.3167 pounds per 100 square
feet or less is .0748.
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t_statistic, p_value = ttest_1samp(df.B, 0.35,nan_policy='omit' )
print('One sample t test \nt statistic: {0} p value: {1} '.format(t_statistic, p_value/2))

One sample t testt statistic: -3.1003313069986995 p value: 0.0020904774003191826

Since pvalue < 0.05, reject H0 . There is enough evidence to conclude that the mean moisture
content for Sample B shingles is not less than 0.35 pounds per 100 square feet. p-value = 0.0021. If
the population mean moisture content is in fact no less than 0.35pounds per 100 square feet, the
probability of observing a sample of 31 shingles that will result in a sample mean moisture content of
0.2735 pounds per 100 square feet or less is .0021.

3.2 Do you think that the population mean for shingles A and B are equal? Form the
hypothesis and conduct the test of the hypothesis. What assumption do you need to check
before the test for equality of means is performed?

H0 : μ(A)= μ(B)

Ha : μ(A)!= μ(B)

α = 0.05

t_statistic=1.29

pvalue=0.202

As the pvalue > α , do not reject H0;

and we can say that population mean for shingles A and B are equal Test Assumptions When
running a two-sample t-test, the basic assumptions are that the distributions of the two populations
are normal, and that the variances of the two distributions are the same. If those assumptions are not
likely to be met, another testing procedure could be use.

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 Problem 1 Problem 2 Problem 3

Wholesale Customers Analysis Clear Mountain State ABC asphalt shingles

University (CMSU)

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 Thank You !

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