# Statistics Question

STATISTICS FOR BUSINESSSpecial Project

Project Description:

Identify and analyze a real-life, business application of statistics. The “business”

can be a for-profit, non-profit, small or large entity. The following are not

acceptable topics:

• A specific application/problem discussed in class

• An application that uses descriptive statistics (i.e., graphs, percentages,

measures of central tendency or dispersion)

The statistical procedure you choose to illustrate MUST be one that was covered

in this course.

You do not have to collect actual data from a business or apply the statistical

procedure/calculate an answer.

To complete your project, copy and paste the form on the second page of this

document. Then, fill in all the blanks. You can adjust the size of the answer

spaces as necessary – the lines are just there to indicate where the answers go.

Do not hand in this instruction page.

Criteria & Administration:

Be concise. Your project submission must not exceed two (2) pages in length

(12-point font).

You must write this. Copies of documents/analyses written by someone else will

not be accepted.

Submit this project via the course website.

The form provided is in bold font. Do not use bold font for your responses.

Using a colored font (other than red) for your responses is preferable.

Hints:

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If you need help finding ideas for business applications, read the problems at the

end of the relevant sections/chapters of the textbook. These problems usually

include a business application/context. And, you can always “Google it.”

If you have difficulty finding an actual business application, you can design and

propose one for a specific business.

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STATISTICS FOR BUSINESS

Special Project

Name:_________________________________________

Date: ____________

Part A: Description of Business Context

Write a brief summary of the business context (e.g., manufacturing, marketing,

finance, etc.) including the name of the company or organization.

________________________________________________________________________

________________________________________________________________________

Part B: Problem/Issue

State the business problem/issue to be addressed using statistics and why this

problem/issue is important to the company/organization.

________________________________________________________________________

________________________________________________________________________

Part C: Statistical Procedure

Explain the statistical procedure (NOTE: Focus on ONE statistical procedure only)

1. Independent variable:

a) What is the variable: ___________________________________________

b) How it is measured, i.e. what units or categories are used (e.g., revenue

measured in “dollars”; height measured as “short, average, tall”)

_______________________________

c) Level of measurement (nominal, ordinal, interval, or ratio):

________________________________________

2. Dependent variable:

a) What is the variable: ___________________________________________

b) How it is measured, i.e. what units or categories are used (e.g., revenue

measured in “dollars”; height measured as “short, average, tall”)

_______________________________

c) Level of measurement (nominal, ordinal, interval, or ratio):

________________________________________

3. Name of the procedure/formula (e.g., ANOVA, Chi-Square, Hypothesis

Test using z formula, Regression Analysis, etc.). NOTE: The procedure/

formula must be one that was covered in the course:

__________________________________________________________________

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4. Describe the statistical rationale/justification for choosing this

procedure/formula:

_______________________________________________

__________________________________________________________________

5. Describe how the data are collected by the business/organization:

__________________________________________________________________

6. Describe how the data are analyzed (i.e., identify the steps in the statistical

procedure): ______________________________________________________

__________________________________________________________________

Part D: Decision/Interpretation

Explain the type of business decision that the company/organization would make

as a result of this statistical analysis. ________________________________

________________________________________________________________________

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STATISTICS FOR BUSINESS

Special Project (Example #2)

Name:

Student B

Date: ____________

Part A: Description of Business Context

Write a brief summary of the business context (e.g., manufacturing, marketing,

finance, etc.) including the name of the company or organization.

Crystal Geyser (Company) sells bottled water, collected from alpine springs,

through various U.S. retail channels.

Part B: Problem/Issue

State the business problem/issue to be addressed using statistics and why this

problem/issue is important to the company/organization.

Several new competitors have entered the market during the past year, eroding

some of the Company’s customer base. The Company wants to revive its sales

through the implementation of a new marketing campaign. As part of this

process, the Company wants to determine the popularity of its product among

customers of different socioeconomic status.

Part C: Statistical Procedure

Explain the statistical procedure (NOTE: Focus on ONE statistical procedure only)

1. Independent variable:

a) What is the variable: Socioeconomic status

b) How it is measured (e.g., revenue measured in “dollars”; height

measured as “short, average, tall”) Low, middle, high

c) Level of measurement (nominal, ordinal, interval, or ratio): Ordinal

2. Dependent variable:

a) What is the variable: Frequency of purchase

b) How it is measured (e.g., revenue measured in “dollars”; height

measured as “short, average, tall”) Never purchase, occasionally

purchase, frequently purchase

c) Level of measurement (nominal, ordinal, interval, or ratio): Ordinal

3. Name of the procedure/formula (e.g., ANOVA, Chi-Square, Hypothesis

Test using z formula, Regression Analysis, etc.). NOTE: The procedure/

formula must be one that was covered in the course: Chi-Square test

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4. Describe the statistical rationale/justification for choosing this procedure/

formula: Chi-Square test for independence is used when the independent

variable has 2 or more groups (nominal or ordinal level) and when the

dependent variable is measured at the nominal or ordinal level.

5. Describe how the data are collected by the business/organization: The

Company hired a market research firm to conduct a survey of a sample of

customers drawn from the target population. Response data were

collected via a telephone survey.

Describe how the data are analyzed (i.e., how the statistical procedure is

performed): The null and alternative hypotheses are defined (H0: There are no

differences among the groups with respect to their frequency of purchase.

H1: There are differences among the groups with respect to their frequency of

purchase.); an alpha level is set; Chi-square is calculated using the formula: χ2

= ∑[(fi,j – ei,j)2 ÷ ei,j]; the calculated χ2 value is compared to the critical χ2 value

(found in the χ2 table); if χ2 calculated < χ2 critical H0 is accepted and if χ2
calculated > χ2 critical H0 is rejected.

Part D: Decision/Interpretation

Explain the type of business decision that the company/organization would make

as a result of this statistical analysis. If H0 is accepted, Crystal Geyser can

conclude that it does not need to differentiate its advertising/marketing strategy

by socioeconomic status. If H0 were rejected, Crystal Geyser would further

analyze the survey results to determine which socioeconomic group(s) to

specifically target in its new marketing campaign.

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STATISTICS FOR BUSINESS – MNS 601

Special Project (Example #1)

Name:

Student A

Date: ____________

Part A: Description of Business Context

Write a brief summary of the business context (e.g., manufacturing, marketing,

finance, etc.) including the name of the company or organization.

The economic crisis affected many industries, particularly the automobile

manufacturing industry. As gas prices soared and jobs were lost, consumers

demanded more fuel-efficient vehicles. The companies that suffered the most

were the ones that continued to produce gas-guzzling vehicles such as trucks

and SUVs, among these manufacturers was Ford Motor Company (Ford). Ford

lost sales quickly during this period and needed a solution soon or risk complete

failure like some of its unlucky competitors.

Part B: Problem/Issue

State the business problem/issue to be addressed using statistics and why this

problem/issue is important to the company/organization.

An example of Ford’s response to the fuel-efficient vehicle market was the new

Focus SE, a model that claims to get 40 MPG. It is important for car

manufacturers, such as Ford, to accurately assess MPG in order to maintain the

integrity of the company’s product as well as to continue attracting future

customers. Therefore, the use of statistics will either validate or invalidate Ford’s

claim that the new Focus SE gets 40 MPG.

Part C: Statistical Procedure

Explain the statistical procedure (NOTE: Focus on ONE statistical procedure only)

1. Independent variable:

a) What is the variable: Type of Car

b) How it is measured (e.g., revenue measured in “dollars”; height

measured as “short, average, tall”) Car make and model

c) Level of measurement (nominal, ordinal, interval, or ratio): Nominal

2. Dependent variable:

a) What is the variable: Mileage (MPG)

b) How it is measured (e.g., revenue measured in “dollars”; height

measured as “short, average, tall”) Miles per gallon (MPG)

MNS 601 Special Project

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3.

4.

5.

6.

c) Level of measurement (nominal, ordinal, interval, or ratio): Ratio

Name of the procedure/formula (e.g., ANOVA, Chi-Square, Hypothesis

Test using z formula, Regression Analysis, etc.). NOTE: The procedure/

formula must be one that was covered in the course: Hypothesis test (One

sample t test)

Describe the statistical rationale/justification for choosing this

procedure/formula: Need to test the hypothesis that the population mean

for the Ford Focus SE is 40 MPG. A t-test is appropriate here because the

following assumptions for a t-test are met in this problem, specifically the

standard deviation of the population is unknown and the dependent

variable is at the interval or ratio level of measurement.

Describe how the data are collected by the business/organization: Ford

test-drove a random sample of Ford Focus SE cars and calculated the MPG

for each vehicle.

Describe how the data are analyzed (i.e., how the statistical procedure is

performed): The null and alternative hypotheses are defined (H0: u = 40

MPG, H1: u ≠ 40 MPG); an alpha level is set; the mean MPG for the sample

of cars is calculated; the calculated t value is determined using the formula

t = (sample mean – population mean) ÷ (s / √ n); the calculated t value is

compared to the critical t values (found in the t-table); if t calculated < t
critical H0 is accepted and if t calculated > t critical H0 is rejected.

Part D: Decision/Interpretation

Explain the type of business decision that the company/organization would make

as a result of this statistical analysis. If H0 is accepted, Ford can confidently

market the Ford Focus SE as having a mileage rating of 40 MPG. If H0 is rejected,

Ford would not be able to advertise the Ford Focus SE as having a mileage rating

of 40 MPG and may decide to perform additional quality tests on the model to

identify any deficiencies.

MNS 601 Special Project

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