Akansha Bansal

GJ23NS005
Section A
Ques 1

Regular stores Clearance sale

Given: Mean 120 80
SD 20 10
Pieces 50000 30000

Since prices are normally distributed, we can use following to calculate segment-
We have assumed (mean +- 3 SD) = 100%

Ranges 60
180
50
110

Calculated:
Condition Probability Tshirt needed %
Segment 1 60 and below 0.023 682.504 0.008531
Segment 2 Above 110 0.691 34573.123 0.432164
Segment 3 Between 60 and 110 44744 0.559305
80000.000

60 110
180
50
Seg-2

Seg1- 682.5

Seg3- 57298 Seg2- 22019

b) Factors to be considered when making pricing decision:

When making price desions Nike to should know which customer segment they are targeting.
1. Demand forecasting: On the basis of past trends, Nike can forecast demand for each segment to analyze
how much people are willing to pay at higher side.
c) Demand forecasting helps in setting the prices for Nike as it will help in which segment customer usually shops. It w
If there is high demand of Nike then they can keep high prices as people will be willing to pay premium prices.
To optimise pricing and inventory management, demand forecasting will definitely help as they will be aware how m
Also, demand data will help them to reduce the chances of stock out in regular stores.

During the annual clearance sale, Nike can maximize profit in number of ways:
1. Increase in reach: By proper awareness the nike brand can create the need for their product in the
market and by letting know people that there is sale to attract specially segment 1 type customers.
2. Range and Quality of products: The Nike brand can try to maintain same quality for the products offering
during the sale time, this would help people to visit the store even if they were not in need.
d)
rgeting.
h segment to analyze
 t customer usually shops. It will help analyse the customer behavior towards the brand.
g to pay premium prices.
lp as they will be aware how much to keep in stores and how much to keep in warehouse.

r product in the
e customers.
the products offering
need.
Section B

Ques 2
Given that
The average weight loss due to diet program is more than or equal to 10 pounds.
Consumer wants to test this statement.

Sample
Size 18
Mean 10.8
Standard Deviation 2.4

a) Setting up hypothesis-

We want to test whether the average weight loss due to program is less than the advertisement claim of 10 pounds
Therefore, Let
µ = Mean
Null Hypothesis Hο: average weight loss due to program is more than euals to 10 pounds
Alternate Hypothesis H1: average weight loss due to program is less than 10 pounds

Hο: µ ≥ 10 pounds
H1: µ ˂ 10 pounds

b) Level of significance = 5%
Level of confidence= 95%

Critical value
We are using t test for calculating critical value as sample is less than 30 and population SD is not known
As per the hypothesis H1: µ ˂ 10 pounds, therefore it is a one tail test.

Critical value -1.73961

Decision rule: If tstat is less than critical value we reject null hypothesis.

c) x̄ is sample mean
T statistic = x̄ - µ / (s / √n) µ = Population Mean
s = Standard Deviation
n = Sample Size

T stats 1.414214

d) Since tstat value is more than critical value, therefore we reject alternate hypothesis.
Tstat falls in acceptance area.
 CV= -1.74

e)
Yes we can perform hypothesis test for each group based on the mean and standard deviation for each group.
Null hypothesis: there is no significant difference between 2 groups
Alt hypothesis: there is significant difference in two groups

We should also quantify the number for significant difference.

Level of significance=5%

Over 40
f) Mean 12
SD 2
Size 20
keeping population mean as same 10
tstat 4.472136

Tstat value of under 40 is 0 which means there is not variability. And since we are getting tsta value for over 40 very
 pounds
pounds

vertisement claim of 10 pounds.

tion SD is not known

x̄ is sample mean
µ = Population Mean
s = Standard Deviation
n = Sample Size
deviation for each group.

Under 40
10
2.5
20
10
0

tting tsta value for over 40 very high this signifies there is significant difference between both of them.
Section C

Ques 4

Dependent variable Cups of coffee sold per month

Independent variable Price of cup of coffee (X1)
Independent variable Advertising posters (X2)
Independent variable Temperature (X3)

a) Based on regression output

Regression equation= 47.31-8.56*price+6.12*advertising-0.4* temperature

The coeffecient of price is -8.56 which means with average increase in price, the number of cup of coffee
sold per month drops by 8.56. Further, the negative relations indicate inverse relationship between price
b) and monthly sales.

The coeffecient of advertising is 6.12 which means with every increase in advertising poster, the number
of coffee sold per month increases by 6.12.

The coeffecient of temperature is -0.4 which means with every increase in advertising poster, the
number of coffee sold per month decrease by 0.4. Further, the negative relations indicate inverse
relationship between temperature and monthly sales.

c) Using regression equation-

Number of coffee sold per month 11.83
Revenue (monthly) 41.405 dollars

d) Determination significance of price

Let price be denoted by X1

Null Hypothesis X1=0
Alt hyptothesis X1 not equal to 0
p value 0.0022
LOS 0.05
Since p value is less than LOS, Alt is true which means price is a significant variable.

e) Let advertising poster be denoted by X2

Null Hypothesis X2=0
Alt hyptothesis X2 not equal to 0
p value 0.0003
LOS 0.05
Since p value is less than LOS, Alt is true which means price is a significant variable.

f) Let temperature be denoted by X3

Null Hypothesis X3=0
Alt hyptothesis X3 not equal to 0
p value 0.0007
LOS 0.05
 Since p value is less than LOS, Alt is true which means temperature is a significant variable.

g) For determining the dependent variable (number of cup of coffee) with the three given independent variables we c

Independent variable Tstat value Ranks

Price -3.73 3 Note: We do not see the sign while assign
Advertising poster 5.1 1
Temperature -4.35 2

Though as we determined that all three variables are significant but on the basis of rank we can advertising poster h

This regression model helps in pricing and advertising strategies in following way-
Advertising: To increase their sales per month, the shop should focus on increasing number of posters as it will help
Pricing: The shop should set the price in optimum way as with every average increase in price, number of cup of co
mber of cup of coffee
onship between price

g poster, the number

ng poster, the
dicate inverse
ven independent variables we can determine the ranks using tstat value.

do not see the sign while assigning rank, we only see magnitude.

rank we can advertising poster have the major impact.

number of posters as it will help in increase number of cup of coffee the most.
se in price, number of cup of coffee cups are dropping by 8.56.