THIRD PARTY LOGISTICS

BY:
SUSMIT SAHA
UDAY DALVI
PROBLEM STATEMENT
•US  Logistics, a Bangalore based logistics firm provides logistics solutions for
SMEs. Recently, the firm is contemplating to implement 3PL (Third Party
Logistics) into its service line. In order to collect information, the firm
conducted a survey and is using Chi-square method to find out whether
implementation of 3PL is affected by cost of implementation. Taking for df =
3. Parameter Definitely Never Future Plans Different Plan Total
Implementing
27 2 12 9 50
3PL
Cost of
6 4 11 4 25
Implementation
Total 33 6 23 13 75
SOLUTION
• Defining the Hypothesis:
• Null Hypothesis H0: Implementation of 3PL is not affected by cost of
implementation.

• Alternate Hypothesis Ha: Implementation of 3PL is affected by cost of

implementation.
Expected
Parameter Definitely Never Future Plans Different Plan Total
Implementing 3PL 22 4 15.33 8.67 50

Cost of
11 2 7.67 4.33 25
Implementation
Total 33 6 23 13 75
CHI-SQUARE CALCULATION
Different
Definitely Never Future Plans Total
Observed-Expected Plan
Implementing 3PL 5 -2 -3.33 0.33  
Cost of Implementation -5 2 3.33 -0.33  
(Observed-Expected)^2          
Implementing 3PL 25 4 11.11 0.11  
Cost of Implementation 25 4 11.11 0.11  
(Observed-  
Expected)^2/Expected        
Implementing 3PL 1.14 1 0.72 0.013 2.87
Cost of Implementation 2.27 2 1.45 0.026 5.75

Estimated Chi square Value         8.62

CONCLUSION
• Estimated Chi square value = 8.62
• Degrees of Freedom = (No. of Rows-1)*(No. of Columns-1) = 1*3 = 3
• Test at the 5% level of significance if the null hypothesis that implementation
of 3PL is not affected by cost of implementation (Chi square for 3 df = 7.81)
• Since the estimated value is more than table value, null hypothesis is
rejected. In other words the implementation of 3PL is affected by cost of
implementation.
THANK YOU