RESEARCH ARTICLE

Copyright © 2016 American Scientific Publishers Advanced Science Letters

All rights reserved
Printed in the United States of America

Annual Wholesale Distributor

Spending on Products
M.Asrul Affendi Abdullah1, Siti Afiqah Muhamad Jamil2,
Nurmarni Athirah Abd Wahid3, Emir Mukhriz Zaimi4, Amerudin Abd Ghani5, Umar Farouq Abd Ghaffar6
1, 2
Mathemathics and Statistics Department, Universiti Tun Hussein Onn, Jln Parit Raja, 86400, Batu Pahat, Johor, Malaysia
3, 4, 5, 6
Computer and Mathematical Science Department, Universiti Teknologi Mara, Kota Bharu, 15400, Kelantan, Malaysia

Wholesale distributor activities have widely spread among people as they are engaged to gain the profit. The study is conduct
to review the annual wholesale distributor spending on products in Portugal 2011 because of the difficulties in identifying
which product could maximize their profit for the wholesale business and the research intend to study on the problem of
difficulty in grouping the important variable with similar characteristic to maximize the profit. This data contain 440 sample
of annual spending on diverse product categories and number of customer spending on the annual wholesale. The objectives
of the study is to determine the correlation between dependent variable which is the annual spending on fresh products, milk
products, grocery products, frozen products, detergent and paper products, and delicatessen products, to determine the
significant differences in mean of each annual spending on fresh products, milk products, frozen products, grocery products,
detergent and paper products, and delicatessen products towards the region and to factorize the factors that are highly
correlates to each other. The study used multivariate analysis of variance and factor analysis to further analyze the data and to
satisfy the objectives. The finding indicates that: (1) there is strong positive relationship between GROCERY–
DETERGENT_PAPER and the GROCERY–MILK. (2) There is no significant difference in mean treatment effect between
the region (Lisbon, Oporto, other) towards the annual spending of fresh product, milk products, frozen product, grocery
product, detergent and paper product, and food store product. (3) There are two factors that are correlated to each other by
using factor analysis.

Keywords: Wholesale distributor, Correlation, MANOVA, Factor Analysis

.

1. INTRODUCTION
Wholesale distributor is a company who handles
the wholesale shipments for the manufacturers of
products. They have their own warehouse, distribution
center and proper shipping management. A wholesale
distributor deals with various types of products in a very
large quantity. They can ship the products to a number of
retailers which can come from various places and regions.
A critical activity for an organization is when the
processing product returns of the benefits flowing back
through the supply chain rapidly increases simultaneously
[1]
. Besides, the previous study has been reported, that the
values of products being returned overreach an estimated
1
$100 billion per year and averages about 6 per cent sales
[1-2]
. Estimated of the product returns could range from
15% for mass merchandisers to 35% for the e-commerce
retailers [3]. Manufacturer could recover only a portion of
the value returned products because of the processing
delays as the products return are known to account for
large proportion of a reverse logistics activities [1]. So that,
the distributors required controlling the store policies on
returns as they can have significant impact on the volume
and the type of products being returned.
The study used Portugal as the research interest
because Portugal is considered as a correct player on the
export market with the total production at 39.9%. Based
on the World Data Bank, Portugal is known as a perfect
 Adv. Sci. Lett., 1-7, 2016
territory for retailers, distributors and suppliers.
Moreover, the regions are selected as the coastal city is
efficient for the products development. The Lisbon is
reviewed as it is the main capital in Portugal. The region
is known cause of the café culture and soulful Fado
music. Consequently, the region of Oporto, Portugal also
has been selected as part of this research study. It is
because, as the coastal city, Oporto is known for its
stately bridges and port wine production. Besides, in
Medieval Ribera (riverside) district, there are houses and
café which are built as formerly stock market to impress
the potential European investors. Then, the other regions
are also reviewed in this research study. The overview of
map in Portugal could be seen on Figure 1 below.
Figure 1: Region of study at Portugal
Mainly, there are three objectives in this research.
The first objective is to determine the correlation between
dependent variable which is the annual spending of fresh
products, milk products, grocery products, detergent and
paper products, and delicatessen products. The second
objective is to determine the significant differences in
mean of each annual spending on fresh products, milk
products, frozen products, grocery products, detergent and
paper products, and delicatessen products towards the
region and channel. The last objective is to factorize the
factors that are highly correlates to each other.
The study selected wholesale distributor at
Portugal and evaluate the annual spending in monetary
units (m.u) on diverse products categories. The monetary
unit assumption is that in the long run, the dollars is
stable. It does not lose its purchasing power. This
assumption allows the accountant to add the cost of parcel
of land purchased in 2013 to the cost of land purchased in
1956. The categories are; fresh products, milk products,
grocery products, detergents and paper products, and
delicatessen products. Besides that, we also take the
customers and retailers channel and their region into
consideration.
RESEARCH ARTICLE
Based on the previous researcher, spending on
milk products becomes an important demand for food
safety among consumers in developing countries. Based
on the study, it includes the investigation of consumer
awareness, willingness to pay, and price premiums for
milk products manufactured using Hazard Analysis
Critical Control Point (HACCP). As the products with
HACCP labels in Beijing supermarkets sold at a premium
of about 5% over the products without such labels, and
make the other product attributes remain constant. The
results indicate that the demand for food safety becomes
prominent as an attribute demanded by the Chinese
consumers [4].
In addition, a case study proposed an
investigation of attitudes towards delicatessen and
specialty food for consumers in the North West region.
Recent research has provided opportunities and
challenges as the consumers are now travelling, visiting
countries trying new food, and finding for the experiences
when it comes to eating habits and choice of dietary.
Since, delicatessen products is known as thee food store
products, the survey found that, for the specialty of food
stores, ones need to survive as they required to
differentiate their product ranges [5].
Another research paper that we had found is
about the spending on fresh products. Asian households
spend more than other households when it comes to the
fresh fruits, fresh vegetables, rice, seafood and spending
less on dairy products and oils. The study was analyzed
using the regression analysis and one of the results
indicates that as holding other factors constant, fruits as a
share of total food-at-home spending is about 4
percentage point higher among Asian Households, but
dairy as share of total food-at-home spending is 4 to 6
percentage lower among Asian households [6].
Figure 2: Wholesale price index at Portugal
Based on Figure 2, the figure showed the wholesale price
index at Portugal within 2000 to 2015 [7]. Thus, within
2010 to 2015, as the graph increased, the researcher tends
to studied on the wholesale distributor at 2011.
2. MATERIALS AND METHODS
In this research, the study decided to use
secondary data on the wholesale customer data in
Portugal at 2011[8]. The data set refers to customers of a
wholesale distributor. For one customer, the annual
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 RESEARCH ARTICLE

wholesale spending on the products is recorded based on

its diverse products. The study used annual wholesale
distributor on the monetary units (m.u) of its Table 2: Quantitative Variables
corresponding diverse product categories. Besides, the
data are based on the frequency of population from Variable Name Description Data Type
Lisbon, Oporto, and other region with 77, 47, 316
FRESH Annual spending Continuous
customers respectively while frequency of channel which on fresh product
are from Horeca (Hotel/Restaurant/Cafe) and Retail are MILK Annual spending Continuous
298 and 142 customers respectively. on milk product
To make an analysis from the observation of the GROCERY Annual spending Continuous
data set, the study used Pearson correlation coefficient [9], on grocery product
multivariate analysis of variance (MANOVA) [10] and FROZEN Annual spending Continuous
factor analysis [11], at 5% level of significance to achieve on frozen product
the objectives. The data was analyzed by SPSS software DETERGENT_PAPER Annual spending Continuous
[11]
. Attributes information is about annual spending on on detergent and
paper product
fresh product (FRESH), annual spending on milk product
DELICATESSEN Annual spending Continuous
(MILK), annual spending on grocery (GROCERY), on food-store
annual spending on frozen product (FROZEN), annual product
spending on detergent and paper products
(DETERGENT_PAPER), annual spending on food-stores
product (DELICATESSEN), REGION which includes 3. EXPERIMENTAL RESULT
region from Lisbon, Oporto, or others and also the
CHANNEL. There are two independent and six 3.1 DESCRIPTIVE ANALYSIS
dependent variables in this study of the annual wholesale
distributor spending as follow: Table 3: Descriptive Statistics
Table 1 shows the qualitative variables that are
Mean Std. N
used in this study. The variables indicate nominal data
Deviation
type. Starting from the variable of REGION consist of
three regions. The first region was a customer that comes FRESH 12000.30 12647.329 440
MILK 5796.27 7380.377 440
from Lisbon, the second customer from Oporto, and the
third customer from the other region. CHANNEL can be GROCERY 7951.28 9503.163 440
FROZEN 3071.93 4854.673 440
specifies by two parts which are the customer comes from
Horeca and customers comes from the retail channel. DETERGENT_PAPER 2881.49 4767.854 440
DELICATESSEN 1524.87 2820.106 440
Horeca implies the Hotel, Restaurant and the Café.

Table 1: Qualitative Variables Based, on descriptive analysis, we can see that

variable of FRESH have mean 12000.30, MILK have
Variable Description Data mean 5796.27, variable of GROCERY have mean
Name Type
7951.28, variable of FROZEN have mean 3071.93,
REGION 1= Customer from Lisbon Nominal
variable for DETERGENT_PAPER have mean 2881.49
region
2=Customer from Oporto and DELICATESSEN have mean 1524.87 with their
region standard deviation respectively.
3=Customer from other region
CHANNEL 1=Customer from Horeca Nominal NORMALITY ASSUMPTION
channel (Hotel, Restaurant,
Café)
2=Customer from retail
Table 4: Test of Normality
channel Kolmogorov-Smirnov
Table 2 below shows the quantitative variables Statistic df Sig.
that being used in this research paper. Based on the table, FRESH 0.171 440 .000
there are six quantitative variables that shows continuous MILK 0.218 440 .000
data type. The FRESH, MILK, GROCERY, FROZEN, GROCERY 0.203 440 .000
DETERGENT_PAPER, and DELICATESSEN products FROZEN 0.265 440 .000
indicates the annual spending on the products in terms of
DETERGENT_P 0.273 440 .000
monetary units (m.u).
APER
DELICASSEN 0.295 440 .000

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 Adv. Sci. Lett., 1-7, 2016 RESEARCH ARTICLE

plot graph. Therefore, normality plot are constructed

based on channel (Horeca and Retail) on the annual
Table 5: Examine the skewness wholesale distributor with the plot of Region (Lisbon,
Oporto and others) on the annual wholesale distributors
Statistic Std.
Error on diverse products.
FRESH Mean 12000.30 602.938 The results could be said that normality
95% Lower 10815.29
Confidence Bound
assumption is satisfied as the point plot on annual
Interval for Upper 13185.30 wholesale distributor data are approximately to the
Mean Bound straight line. In spite of that, since, the data is secondary
Skewness 2.561 .116
MILK Mean 5796.27 351.846
data, it is limitedly taken from Portugal with certain
95% Lower 5104.75 region and channel. Therefore, the normality could be
Confidence Bound assumed to be normal.
Interval for Upper 6487.78
Mean Bound
Skewness 4.054 .116
GROC Mean 7951.28 453.046 3.2 CORRELATION BETWEEN DEPENDENT
ERY 95% Lower 7060.87
Confidence Bound VARIABLE
Interval for Upper 8841.68
Mean Bound
Skewness 3.587 .116
We analyzed the relationship for variables of the
FROZ Mean 3071.93 231.437 annual spending of fresh product (FRESH), milk products
EN 95% Lower 2617.07 (MILK), frozen product (FROZEN), grocery product
Confidence Bound
Interval for Upper 3526.79
(GROCERY), detergent and paper product
Mean Bound (DETERGENT_PAPER), and food store product
Skewness 5.908 .116 (DELICATESSEN) by using Pearson Correlation. Based
DETE Mean 2881.49 227.299
RGEN 95% Lower 2434.76 on correlations table, we can conclude that there is strong
T_PAP Confidence Bound positive relationship between GROCERY and
ER Interval for Upper 3328.22 DETERGENT_PAPER since r = 0.925 and for the pair
Mean Bound
Skewness 3.632 .116 GROCERY and MILK is r = 0.728. There is weak
DELIC Mean 1524.87 134.443 negative relationship for pair of FROZEN and
ATESS 95% Lower 1260.64
EN Confidence Bound
DETERGENT_PAPER, FRESH and GROCERY, FRESH
Interval for Upper 1789.10 and DETERGENT_PAPER which the value of r is -0.132,
Mean Bound -0.012, and -0.102 respectively. While, the other pair of
Skewness 11.152 .116
variable indicates weak positive relationship.
Before proceed with other test, the study need to
check whether the variables satisfied the normality Table 6: Summarizing Correlation of Variable
assumption. Based on Table 4, to test the normality Variables Value Correlation
assumption the study use Kolmogorov-Smirnov as the P- DETERGENT_PAPER– 0.925 Strong
value = 0.000 < α = 0.05, thus study reject H o. Therefore, GROCERY positive
the study can conclude that the annual spending of fresh GROCERY–MILK 0.728 relationship
product (FRESH, milk products (MILK), frozen product
(FROZEN), grocery product (GROCERY), detergent and DELICATESSEN– 0.069 Weak
DETERGENT_PAPER positive
paper product (DETERGENT_PAPER), and food store
FRESH–MILK 0.101 relationship
product (DELICATESSEN) are not normally distributed.
MILK–FROZEN 0.124
Based on the table descriptive in Table 5 above,
the skewness of annual spending of fresh product FRESH–FROZEN 0.346
(FRESH) is 2.561, milk products (MILK) is 4.054, frozen FRESH–DELICATESSEN 0.245
product (FROZEN) is 5.908, grocery product MILK –DELICATESSEN 0.406
(GROCERY) is 3.857, detergent and paper product GROCERY–DELICATESSEN 0.205
(DETERGENT_PAPER) is 3.632, and food store product FROZEN–DELICATESSEN 0.391
(DELICATESSEN) is 11.152. Besides, all the values of FROZEN– -0.132 Weak
skewness are out of the range between -1 and +1. Thus, DETERGENT_PAPER negative
the normality assumption was not satisfied for each FRESH–GROCERY -0.012 relationship
variable. FRESH–DETERGENT_PAPER -0.102
By referring to both Kolmogorov-Smirnov test
and measuring the value of skewness, the normality
assumption does not satisfied statistically and lead further 3.3 TEST THE EQUALITY OF THE REGION
solution to cope with the problems. Another ways on (MANOVA TEST)
observing the normality assumption is by the probability
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 RESEARCH ARTICLE

First, we test whether the covariance matrices of Decision:

the annual spending of fresh product (FRESH), milk
products (MILK), frozen product (FROZEN), grocery
product (GROCERY), detergent and paper product
(DETERGENT_PAPER), and food store product
(DELICATESSEN) are associated with the three
population of REGION (Lisbon, Oporto, other) are equal
or not equal.
Hypothesis:
H0: Σ1 = Σ2 = Σ3 = Σ
H1: at least one Σℓ ≠ Σ
Reject H0 if P-value < α
Since P-value = 0.235 > α = 0.05; we failed to reject H0
Conclusion:
We can conclude that there is no significant difference in
mean treatment effect between the region (Lisbon,
Oporto, other) towards the annual spending of fresh
product (FRESH), milk products (MILK), frozen product
(FROZEN), grocery product (GROCERY), detergent and
paper product (DETERGENT_PAPER), and food store
product (DELICATESSEN)

Level of significance: 3.4 DESCRIBE THE COVARIANCE

α = 0.05 RELATIONSHIP AMONG THE VARIABLES BY
USING FACTOR ANALYSIS
Test statistic:
P-value of Box’s M test = 0.000 Table 8: KMO and Barlett’s Test
KMO and Bartlett's Test
Decision:
Reject H0 if P-value < α Kaiser-Meyer-Olkin Measure of 0.662
Since P-value (0.00) < α (0.05); we reject H0 Sampling Adequacy.

Conclusion: Table 8 shows the result of KMO and Bartlett’s

We can conclude that covariance matrices of the annual test which comprised the value of 0.662 and 1477.455
spending of fresh product (FRESH), milk products respectively with 15 degrees of freedom and 0.000 value
(MILK), frozen product (FROZEN), grocery product of significance.
(GROCERY), detergent and paper product
(DETERGENT_PAPER), and food store product Table 9: Communalities
(DELICATESSEN) with the three population of REGION Initial Extraction
(Lisbon, Oporto, other) are not the same. FRESH 1.000 0.479
MILK 1.000 0.798
Since the assumption of homogeneity covariance GROCERY 1.000 0.924
matrices was not satisfied, we still proceed with multiple FROZEN 1.000 0.643
analyses of variance (MANOVA) to achieve our objective DETERGENT_PAPER 1.000 0.907
of the study. We test the equality of the region (Lisbon, DELICATESSEN 1.000 0.596
Oporto, other) towards the annual spending of fresh
product (FRESH), milk products (MILK), frozen product Extraction Method: Principal Component Analysis.
(FROZEN), grocery product (GROCERY), detergent and
paper product (DETERGENT_PAPER), and food store Table 9 shows the communalities value which
product (DELICATESSEN). indicates the extraction of each dependent variable of the
Fresh, Milk, Grocery, Frozen, Detergent_Paper and
Table 7: Multivariate Test Delicatessen products.

Effect Wilks’ Lambda

(significant)
REGION 0.235

Hypothesis:
H0: µ1 = µ2 = µ3 = µ4 = µ5 = µ6 = 0
H1: at least one µℓ ≠ 0

Level of significance:
α = 0.05
Figure 3: Scree Plot
Test statistic:
P-value of Wilks’ Lambda = 0.235 From Figure 3, shows a scree plot for a situation
with six principle components. An elbow occurs in the
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 Adv. Sci. Lett., 1-7, 2016 RESEARCH ARTICLE

plot at about i =3. That is the eigenvalues after ^λ 2 are all DETERGENT_PAPER since r = 0.925 and for the pair
relatively small and about the same size. In this case, it GROCERY and MILK with r = 0.728. There is weak
appears without any other evidences, that two or perhaps negative relationship for pair of FROZEN and
three sample principle components is effectively DETERGENT_PAPER, FRESH and GROCERY, FRESH
summarize the total sample variance. and DETERGENT_PAPER which indicates the values of
r; -0.132, -0.012, and -0.102 respectively. While, the other
Table 10: Factor Matrix pair of variable indicates weak positive relationship.
(Extraction Method: Maximum Likelihood) From the test equality of covariance matrices of
region, we can conclude that the assumption of
Factor homogeneity covariance matrices was not satisfied, but
1 2 we still proceed with multiple analyses of variance
DETERGENT_PAPER 0.967 -0.113 (MANOVA) to achieve our objective of the study.
GROCERY 0.965 Therefore, there is no significant difference in mean
MILK 0.728 0.373 treatment effect between the region (Lisbon, Oporto,
DELICATESSEN 0.159 0.725 other) towards the annual spending of fresh product
FROZEN 0.559 (FRESH), milk products (MILK), frozen product
FRESH 0.421 (FROZEN), grocery product (GROCERY), detergent and
paper product (DETERGENT_PAPER), and food store
Table 11: Rotated Factor Matrix product (DELICATESSEN).
(Extraction Method: Maximum Likelihood) By using factor analysis ,maximum likelihood
Factor estimator we can categories the variable of GROCERY,
1 2 MILK, and DETERGENT_PAPER as factor 1 which is
dry products, while variable DELICATESSEN, FROZEN
GROCERY 0.967
and FRESH as factor 2 which is wet products.
DETERGENT_ 0.957 -0.178
PAPER
5. DISCUSSION
MILK 0.752 0.323
DELICATESSEN 0.208 0.713
Based on the conclusion, as the distributor needs
FROZEN 0.563
to review whether there are any differences in the
FRESH 0.423
contribution of each category of products on the annual
spending of the wholesale distributors, the results shows
Table 12: Factor Transformation Matrix GROCERY and DETERGENT_PAPER with GROCERY
Factor 1 2 and MILK have high contributions. Besides, distributors
1 0.998 -0.068 also have difficulties in identifying which product could
2 0.068 0.998 maximize their profit for the wholesale distributor.
Therefore, the results indicate that there is no difference
For the maximum likelihood method, the first between all products to maximize their profit as all
factor appears to be dry products factor which is products have the same rate of contribution in industries.
GROCERY, MILK, and DETERGENT_PAPER, but the Lastly, as the distributors having difficulties in
loading pattern is not as strong as principle component categorizing the important products with similar
factor solution. The second factor is primarily wet product characteristics, hence, this paper comes with the results
which consist of DELICATESSEN, FROZEN and that shows GROCERY, MILK, and
FRESH product but the frozen and fresh product cannot DETERGENT_PAPER as dry products, while variable
be easily identify since the factor loading is not as high as DELICATESSEN, FROZEN and FRESH as wet
delicatessen. So, study shall proceed with factor rotation. products.
From the table 9, it is clear that the variable of The study recommend that the wholesale
GROCERY, MILK, and DETERGENT_PAPER define as distributor should provide more grocery, detergent and
factor 1 (high loading on factor GROCERY), while paper product compared to fresh, frozen, milk and
variable DELICATESSEN, FROZEN and FRESH define delicatessen products to maximize their profit. Besides,
as factor 2. Hence the study might call factor 1 as dry they do not have to prioritize any channel or region for
product and factor 2 as wet product. the shipping of products. Last but not least, the wholesale
distributer can grouped their product by two groups which
4. CONCLUSIONS are wet product and dry product to maximize their profit .

As the result, based on the correlations table, the ACKNOWLEDGMENTS

study can conclude that there is strong positive
relationship between GROCERY and We would like to thank the Ministry of Higher Education
and Universiti Tun Hussien Onn Malaysia, on supporting
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this research. Thanks to friends for their continuous

commitment in finishing this research project.

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