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I E 2 66 – ENGINEERING S T A T I S T I C S II
CASE
STUDY 2
Burcu YÜZÜAK
Cem YOĞURTCU
Onur YILMAZ
Instructor:
YASEMİN SERİN
In the first part, as our manager assigned we are trying to find out whether or not there
`DAZNEDAR RAKI'”, “average rakı price per bottle in the national market” and “average
beer price in the national market”. We carried out a multiple linear regression analysis to
X1: average rakı price per bottle in the national market (market price)
And in order to control the effects of seasonality on the sales, we assigned seasonal
We used only three variables because the rest of the months, which are in the winter
1
Following this, we applied regression analysis according to this hypothesis:
HA: otherwise
Analysis of Variance
Source D SS MS F P
Regression 6 8263146690 1377191115 974.51 0.000
Residual Error 28 39570015 1413215
Total 34 8302716706
3
90
2
Percent
50 1
0
10
-1
1
-2 0 2 4 20000 40000 60000 80000
Standardized Residual Fitted Value
3
7.5 2
Frequency
5.0 1
0
2.5
-1
0.0
-1 0 1 2 3 1 5 10 15 20 25 30 35
Standardized Residual Observation Order
2
These given Minitab outputs show that, only “average market price in the national
market” and “price of one bottle Daznedar Raki” are significant since only related p values
equal to zero. However, when we looked at the residual plots, we saw there is a pattern.
Following this change, when we tested the same hypothesis again with the new model
Analysis of Variance
Source DF SS MS F P
Regression 6 39420.1 6570.0 18184.62 0.000
Residual Error 28 10.1 0.4
Total 34 39430.2
3
Residual Plots for kök bottles
Normal Probability Plot Versus Fits
99
Standardized Residual
2
90
1
Percent
50 0
-1
10
-2
1
-2 -1 0 1 2 150 200 250 300
Standardized Residual Fitted Value
Standardized Residual
2
6
1
Frequency
4 0
2 -1
-2
0
-2 -1 0 1 2 1 5 10 15 20 25 30 35
Standardized Residual Observation Order
When we check the new residual plots it is seen that the pattern is gone and still only
“market price” and “Daznedar raki price” are significant since only their p-values are equal to
zero as highlighted in the Minitab output above. P-values of “beer market price”, “summer”,
“spring” and “fall” seasons are 0.640, 0.502, 0.270 and 0.839 respectively. These values
indicate that there is no linear relationship between these conditions and sales volume on the
other hand it is evident from the output that there is a relationship between “average raki price
per bottle in the national market” and “price of one bottle of `DAZNEDAR RAKI'” and sales
volume.
We realized that “beer market price”, “summer”, “spring” and “fall” seasons resulted
as insignificant but we need to check whether they are significant when we make regression
analaysis for each of them indivudally. So we tested the hypothesis for four of insignificant
variables, but results didn‟t change. They were still insignificant and an example from these
individual significance analyses which is conducted for „beer market price‟ could be seen
4
below. As reported in the Minitab output below, beer market price has a p-value of 0,950 and
it shows that “beer market price” is still insignificant for the volume of sales.
Analysis of Variance
Source DF SS MS F P
Regression 3 39420 13140 38180.70 0.000
Residual Error 31 11 0
Total 34 39430
Part II:
In part II, Ms. Bahar is considering a price promotion to increase revenues and she
wants us to determine the price that maximizes expected revenue for the next month.
Moreover it is stated that the price could be decreased at most to 32 TL and we should
determine the price level from {32, 33, 34, 35, 36}.
X1: average rakı price per bottle in the national market (market price)
=β0+β1X1+ β2X2
Then we did a regression analysis on Minitab again to determine the correct model
5
The regression equation is
kök bottles = 23.2 + 24.6 market price - 17.2 daznedar raki price
Analysis of Variance
Source DF SS MS F P
Regression 2 39420 19710 59110.93 0.000
Residual Error 32 11 0
Total 34 39430
=23.2+24.6X1-17.2X2
Using our model, we calculated expected revenues for the prices in the given range.
P( )=
P( )= P(Y) =
P( )=
6
Calculation for price = 33TL
P( )=
P( )= P(Y )=
P( )=
P( )=
P( )= P(Y) =
P( )=
7
As it can be seen from the summary of calculations above, total expected revenue is
decreasing as the price level increases. The decrease of revenues in spite of the increase of
price level could be interpreted as the decrease in the sales volume because the increase of
prices affects buyers negatively. Moreover, considering this rising down effect, there is no
need to for further calculations for higher prices such as 35 and 36 TL. To sum up, in order to
increase the expected profits and also revenues, price promotion level should be 32 TL.