Assignment 1 MBA 502

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School

Illinois State University *

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502

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Business

Date

Feb 20, 2024

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Aidan Hickey Professor Dave Morton MBA 502 - Analytical Tools for Management Decisions January 13th, 2024 Assignment 1 Memo: Colvard Office Products, an office furniture supplier and producer, currently utilizes a test at the end of their one-week training program that is aimed at assessing how much each salesperson learned over the course of their training. To determine if it would be reasonable to eliminate portions of this four-hour final test to minimize costs, a statistical analysis needed to be conducted. The objective of this statistical analysis was to run a variety of correlation tests and regression analysis on each of the three subscores of the sales training test as well as the total of these subscores. By conducting this analysis, it can be calculated which subscore, alone or in total, provides the best predictor of performance among Colvard Office Products salespersons at the end of the first year. After analyzing each subscore as well as the total score in relation to predictability of sales performance, it was determined that the total score was the most accurate indicator of sales performance. While the total score was deemed to be the best indicator of sales performance, out of the three subscores, SubScore3 was determined to be the best predictor of sales performance. SubScore3, according to the correlation and regression analysis, is only a slightly less effective indicator of sales performance than the total score. Upon conducting the analysis and the potential benefits gained from implementing a shortening of the test, it can be reasonably proposed that the four-hour final written test be shortened to cut costs. Because SubScore3 provides a statistically similar prediction of sales performance when compared to total score, it would be financially beneficial for Colvard Office Products to cut out SubScore1 and SubScore2 and keep SubScore3 for evaluating salespersons.

Analysis: The first step in conducting this statistical analysis was to go through the data containing the test results from the most recent 120 salespersons hired by Colvard Office Products. After looking over the test scores and sales ratings concerning the 120 salespersons, a correlation table was created. A correlation table shows how high or low a given variable is correlated with other variables in a dataset. Upon creating the correlation table, it was found that the total score and SubScore3 were correlated the most with sales rating. This meant that, by correlation, the total score and SubScore3 data were the best predictors of sales rating among Colvard Office Products salespersons. With the correlation data gathered, the next step was building graphs to visually represent the correlation. To do this, scatter plot charts of the total score and each subscore were created. These scatter plot charts also featured trendlines, as well as the linear equations for those trendlines. When looking at the scatter plot charts for total score and SubScore, it is clear that each set of data have highly positive correlations to sales rating. Following this set of statistical analysis, it was crucial to determine if total score and SubScore3 were relevant variables relating to sales rating. To better understand the relevancy of total score and SubScore as variables, a regression analysis was conducted on each of these variables. Following the regression analysis, it was determined that both total score and SubScore3 were relevant variables when compared to sales rating. With this data, sales rating could be reasonably predicted using the regression statistics of total score and SubScore3 compared to sales rating. With SubScore3, each one point increase suggests a 1.208 point increase in sales rating. With total score, each one point increase suggests a .420 point increase in sales rating. The correlation analysis combined with the regression analysis indicates that total score and SubScore3 are reasonable indicators of sales rating among Colvard Office Products employees. When evaluating all the statistical analysis conducted over the course of this study, it is reasonable to conclude that Colvard Office Products should shorten the final test. Since SubScore3 has a similar correlation to total score when compared to sales rating, it would be financially advantageous to shorten the test to just SubScore3. While total score is the best indicator of sales rating according to the regression and correlation analysis, it would make much more sense from a business perspective to shorten the test. By shortening the test to SubScore3, Colvard Office Supplies would optimize the efficiency of the test while also still having a test that provides a very reliable indication of sales performance among new employees. This test shortening could have detrimental consequences, however. For example, by taking out SubScore1 and SubScore2, the company runs the risk of having less data to evaluate the readiness of their incoming employees. This could lead to difficulties among upper management when determining how certain salespersons will perform in the real world. With these negative potential consequences in mind, it is still reasonable for Colvard Office Products to shorten their final test. Overall, the shortening of the final test provides the company a much less time consuming and far more cost effective strategy for evaluating the potential success of their salespeople.

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Assignment 1 MBA 502

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