A restaurant chain specializing in ice cream deserts contacted you to characterize the market for new franchise locations in Upstate NY. The firm is located in the Southwestern US, and has excellent experience there. However, they are opening a few test locations in Buffalo, Syracuse and Albany in the very near future, and have hired you, an Upstate NY statistical consultant, to collect and analyze the results. These restaurants follow a standard blueprint for design, operation, and location. They run a 2,150 sq foot facility in wealthier suburban areas, and usually locate in new plazas near other specialty restaurants that tend not to compete with them (Starbucks, Panera, Fridays, and similar restaurants.) Existing Southwestern locations take in an average of $82,000 a week in sales, with a highly reliable standard deviation of $5,200. Before deciding on their regional distribution strategy, the firm is opening three test restaurants, one in each city. They want you to examine the weekly revenue data and characterize the regional market for their restaurants. Analysis For each of the following three situations, show an experimental design, which includes, at a minimum: a) Indicate whether this is a one-tail or two-tail test, and why. Sketch the problem. b) State your hypotheses c) Identify the level of significance (with justification) d) State the ramifications of the two types of errors, specific to this business. Due to the statistical format and sketching, you may wish to neatly write out your answers to (a) and (b) and scan the resultant pages. 1) Your original contact at the firm was the Senior Vice President (Sr. VP) for business development. She has never been to the Upstate New York, and was skeptical the new restaurants would do well compared to the Southwestern locations. After all the weather was hotter in the Southwest, winters were shorter, and Southwestern cities tended to have better economies overall. If the regional expansion went forward based on your analysis, and then didn’t pan out, the ice cream company would lose a major portion of its investment. The senior vice president was not pushing for this project, but rather was resisting a push from the CEO to move forward. The senior vice president was so sure the new stores would be inferior that he asked you to gather data from the new stores in the test markets, and statistically test for a pattern of inferior sales as compared to the Southern store base. The vice president confided in you that if your test proved him right, he could shelve the project now before the second phase of investment was committed.
A restaurant chain specializing in ice cream deserts contacted you to characterize the market for new franchise locations in Upstate NY. The firm is located in the Southwestern US, and has excellent experience there. However, they are opening a few test locations in Buffalo, Syracuse and Albany in the very near future, and have hired you, an Upstate NY statistical consultant, to collect and analyze the results. These restaurants follow a standard blueprint for design, operation, and location. They run a 2,150 sq foot facility in wealthier suburban areas, and usually locate in new plazas near other specialty restaurants that tend not to compete with them (Starbucks, Panera, Fridays, and similar restaurants.) Existing Southwestern locations take in an average of $82,000 a week in sales, with a highly reliable standard deviation of $5,200. Before deciding on their regional distribution strategy, the firm is opening three test restaurants, one in each city. They want you to examine the weekly revenue data and characterize the regional market for their restaurants.
Analysis
For each of the following three situations, show an experimental design, which includes, at a minimum:
-
a) Indicate whether this is a one-tail or two-tail test, and why. Sketch the problem.
-
b) State your hypotheses
-
c) Identify the level of significance (with justification)
-
d) State the ramifications of the two types of errors, specific to this business.
Due to the statistical format and sketching, you may wish to neatly write out your answers to (a) and (b) and scan the resultant pages.
1) Your original contact at the firm was the Senior Vice President (Sr. VP) for business development. She has never been to the Upstate New York, and was skeptical the new restaurants would do well compared to the Southwestern locations. After all the weather was hotter in the Southwest, winters were shorter, and Southwestern cities tended to have better economies overall. If the regional expansion went forward based on your analysis, and then didn’t pan out, the ice cream company would lose a major portion of its investment. The senior vice president was not pushing for this project, but rather was resisting a push from the CEO to move forward. The senior vice president was so sure the new stores would be inferior that he asked you to gather data from the new stores in the test markets, and statistically test for a pattern of inferior sales as compared to the Southern store base. The vice president confided in you that if your test proved him right, he could shelve the project now before the second phase of investment was committed.
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