1 Project Part A Feedbacks from Prof for Project Part A is within. So please avoid making similar mistakes. Introduction 2 The store we are using is AJ Davis which is a department store chain. In this store, the customers use credit cards as their payment method. The management is interested in finding out more about the customers who use credit cards to pay for the services. Out of the total customers, a sample of 50 customers has been taken using the following selection criteria: I. Location - Urban - Suburban - Rural II. Their Income (in $1,000) III. Size of the household IV. Years the customer has lived there V. The current store credit balance (If you specify the values of one variable, consider doing something similar for the other variables) Individual Variable We are now going to analyze the five variables that we were given to use on this part of A of the project. These variables are Location that is Rural, Urban, and Suburban, and Income, Size, Years and Credit Balance. Location 3 We are going to break down the sample of 50 people according to where they live; Rural= 14 customers Suburban= 15 customers Urban = 21 customers This has been illustrated using the bar chart below: From the bar chart, we can see that 42% of the customer live in urban neighborhood, 30% live in sub-urban neighborhood and 28 % of the customers live in rural neighborhood. From this information we can say that Aj Davis makes a lot of profits from the people who live in the urban neighborhood in comparison to the other locations. The management should now try to tap into the rural and sub-urban neighborhoods and encourage them to buy from the store. (10) 4 Income These were the findings in income: (this involves two variables: location and income) Urban: $47,100 Suburban: $51,000 Rural: $31,000 From the data we noticed that the people in suburban are the highest earners. They have an average of $51,000 per household. They are closely followed by the urban dwellers with an average household income of $47,100. The rural dwellers have the lowest income with a household income of $31,000. When we look back into the number of customers coming into the AJ store you will notice that the suburban dwellers are in the second place. This means that the store is not utilizing the highest earners. Thy should come up with a plan to ensure that they get more customers from the suburban neighborhood. These findings have been shown in the chart below. Below is a pie chart of the income findings from above. 5 We need to find the real purchase power and therefore we are going to see the size of house hold in all the location. This has been summarized in the table below: Household Location Largest HH Size Smallest HH Size Zero's for HH Size Rural (14) Suburban (15) Urban (21) 2 4 3 4 7 1 3,5,6,7 1 From the results presented in the table above we can come up with the following data: Urban neighborhood: 29% = a 3-person household size Rural neighborhoods, 57% = a 2-person household size. Suburban neighborhoods= 33% a 4-person household size. (12)(for two variables) Years Now let us look at the years which the customers have lived in the area. We have looked at them as a group and we came up with the following data: Sample 50 6 Geometric Mean 10.6157 Arithmetic Mean 12.38 Minimum 1 Mode 16, 18, 14 Sum 619 Maximum 20 Median 13 Sample Variance 26.0363 Population Variance 25.5156 Sample Standard Deviation 5.1026 Population Standard Deviation 5.0513 1st Quartile 9 3rd Quartile 16 Outliers Barrier -1.5, 26.5 With the information we have given AJ Davis department stores can now make decisions on how to market themselves. They can now focus on the areas which have more potential and ignore the areas with little or no potential. They can ensure that people who have lived in the area become loyal to their services and that the new comers have gotten to use their products. Getting new customers will depend on the marketing techniques that they choose to employ. They should come up with strategies which focus on people who 7 moved into the area no long ago. This will bring new customers who may become loyal if they are happy with the stores and their services. (10) Credit Card Balances (is this the fourth individual variable? Only three were needed) Credit Balance($) Stem-and-leaf of Credit Balance($) N = 50 Leaf Unit = 100 1 1 8 3 2 44 9 2 557999 15 3 000113 23 3 56678888 (12) 4 001111122224 15 4 6777889 8 5 011333 2 5 56 This Stem-Leaf Display created using MiniTab16. It shows us that the $3500 category has the most customers compare to the rest. It has 23 customers who ate are 8 at or above this amount. We cannot however determine whether they have responsible spending habits from the data we have collected. In advising them we I would ask them to give incentives to the the top customers. They can share this with their friends and this will bring more customers and hence more profit for the stores. They can also encourage the people with lowest credit to spend more. They can start by giving those discounts and telling them if they spend more they will get more discounts. Relationships 1.) Location and Income Average Income by Location Rural $31,000 Suburban $51,000 Urban $ 41,700 The suburban neighborhood has the highest income compared to the other two areas. This location must have highest household sizes. This means that this is the area which AJ Davis should focus on to make more money. I would advise them to give preferential treatment to this area as it has more potential than the others. The smallest location is the rural and it also has the smallest household sizes. (12) 9 2.) Income and Household Size 10 (the graph above indicates three variables) In average the households hold about 2-4 people. When you calculate the average income you will find that it is about $43,033. (11) Reference Downing, D., & Clark, J. (2010). Business statistics. Hauppauge, NY: Barron's Educational Series. Riggleman, J. R., & Frisbee, I. N. (1951). Business statistics. New York: McGraw-Hill. United States., & United States. (1951). Business statistics. Washington: U.S. Department of Commerce, Office of Business Economics. Font color suggests an area that could be improved. Please let me know if you have questions about the scoring or any other aspect. Category Score Description Three Individual Variables 12 points each 30 graphical analysis, numerical analysis (when appropriate) and interpretation Three Relationships 15 points each 35 graphical analysis, numerical analysis (when appropriate), and interpretation Communication Skills 15 writing, grammar, clarity, logic, cohesiveness, adherence to the above format 11 Category Score Description Total 80 A quality paper will meet or exceed all of the above requirements. 1 Project Part A 2 Introduction The store we are using is AJ Davis which is a department store chain. In this store, the customers use credit cards as their payment method. The management is interested in finding out more about the customers who use credit cards to pay for the services. Out of the total customers, a sample of 50 customers has been taken using the following selection criteria: I. Location - Urban - Suburban - Rural II. Their Income (in $1,000) III. Size of the household IV. Years the customer has lived there V. The current store credit balance Individual Variable We are now going to analyze the five variables that we were given to use on this part of A of the project. These variables are Location that is Rural, Urban, and Suburban, and Income, Size, Years and Credit Balance. Location We are going to break down the sample of 50 people according to where they live; 3 Rural= 14 customers Suburban= 15 customers Urban = 21 customers This has been illustrated using the bar chart below: From the bar chart, we can see that 42% of the customer live in urban neighborhood, 30% live in sub-urban neighborhood and 28 % of the customers live in rural neighborhood. From this information we can say that Aj Davis makes a lot of profits from the people who live in the urban neighborhood in comparison to the other locations. The management should now try to tap into the rural and sub-urban neighborhoods and encourage them to buy from the store. 4 Income These were the findings in income: Urban: $47,100 Suburban: $51,000 Rural: $31,000 From the data we noticed that the people in suburban are the highest earners. They have an average of $51,000 per household. They are closely followed by the urban dwellers with an average household income of $47,100. The rural dwellers have the lowest income with a household income of $31,000. When we look back into the number of customers coming into the AJ store you will notice that the suburban dwellers are in the second place. This means that the store is not utilizing the highest earners. Thy should come up with a plan to ensure that they get more customers from the suburban neighborhood. These findings have been shown in the chart below. Below is a pie chart of the income findings from above. 5 We need to find the real purchase power and therefore we are going to see the size of house hold in all the location. This has been summarized in the table below: Household Location Largest HH Size Smallest HH Size Zero's for HH Size Rural (14) Suburban (15) Urban (21) 2 4 3 4 7 1 3,5,6,7 1 From the results presented in the table above we can come up with the following data: Urban neighborhood: 29% = a 3-person household size Rural neighborhoods, 57% = a 2-person household size. Suburban neighborhoods= 33% a 4-person household size. Years Now let us look at the years which the customers have lived in the area. We have looked at them as a group and we came up with the following data: Sample 50 Geometric Mean 10.6157 Arithmetic Mean 12.38 6 Minimum 1 Mode 16, 18, 14 Sum 619 Maximum 20 Median 13 Sample Variance 26.0363 Population Variance 25.5156 Sample Standard Deviation 5.1026 Population Standard Deviation 5.0513 1st Quartile 9 3rd Quartile 16 Outliers Barrier -1.5, 26.5 With the information we have given AJ Davis department stores can now make decisions on how to market themselves. They can now focus on the areas which have more potential and ignore the areas with little or no potential. They can ensure that people who have lived in the area become loyal to their services and that the new comers have gotten to use their products. Getting new customers will depend on the marketing techniques that they choose to employ. They should come up with strategies which focus on people who moved into the area no long ago. This will bring new customers who may become loyal if they are happy with the stores and their services. 7 Credit Card Balances Credit Balance($) Stem-and-leaf of Credit Balance($) N = 50 Leaf Unit = 100 1 1 8 3 2 44 9 2 557999 15 3 000113 23 3 56678888 (12) 4 001111122224 15 4 6777889 8 5 011333 2 5 56 This Stem-Leaf Display created using MiniTab16. It shows us that the $3500 category has the most customers compare to the rest. It has 23 customers who ate are at or above this amount. We cannot however determine whether they have responsible spending habits from the data we have collected. 8 In advising them we I would ask them to give incentives to the the top customers. They can share this with their friends and this will bring more customers and hence more profit for the stores. They can also encourage the people with lowest credit to spend more. They can start by giving those discounts and telling them if they spend more they will get more discounts. Relationships 1.) Location and Income Average Income by Location Rural $31,000 Suburban $51,000 Urban $ 41,700 The suburban neighborhood has the highest income compared to the other two areas. This location must have highest household sizes. This means that this is the area which AJ Davis should focus on to make more money. I would advise them to give preferential treatment to this area as it has more potential than the others. The smallest location is the rural and it also has the smallest household sizes. 9 2.) Income and Household Size 10 In average the households hold about 2-4 people. When you calculate the average income you will find that it is about $43,033. Reference Downing, D., & Clark, J. (2010). Business statistics. Hauppauge, NY: Barron's Educational Series. Riggleman, J. R., & Frisbee, I. N. (1951). Business statistics. New York: McGraw-Hill. United States., & United States. (1951). Business statistics. Washington: U.S. Department of Commerce, Office of Business Economics. DeAngela L. Dixon Math -533-61613: Applied Managerial Statistics Project A A. Brief Introduction: There are 50 credit customers who were selected for the data collection on five variables such as location, income, size, years, and credit balance. In order to understand more about their customer, AJ DAVIS must used graphical, numerical summary to be able to interpret and better expand their business in the future. B. Discuss your 1st individual variable, using graphical, numerical summary and interpretation: Histogram of Income ($1000) 7 6 F requency 5 4 3 2 1 0 20 30 40 50 Incom ($1000) e 60 A histogram shows the distribution of data within the Income. In this Histogram graph of Income, it shows that the graph is not symmetrical. This histogram graph has a wider bell shape form. This graph is more like two graphs because there is a clear difference between income generating from 20-40 and from 50-above. There are two separated cluster; therefore, the skewness of this graph is skewed right. Income has a lower value of kurtosis which indicates a lower, less distinct peak. The following table shows the numerical summary of Income: The P-value of the Income using the Anderson-Darling Normality Test is 0.027 and the A-Squared is 0.85. With the 95% Confidence Interval for Mean, Median, and St Dev are as followed: C. Discuss your 2nd individual variable, using graphical, numerical summary and interpretation : Histogram of Credit Balance($) 14 12 F requency 10 8 6 4 2 0 2000 2500 3000 3500 4000 Credit Balance($) 4500 5000 5500 A histogram shows the distribution of data within the Credit Balance. In this Histogram graph of Credit Balance, it shows that the graph is symmetrical with the exception of one outlier which is credit balance of $2,000. This is a normal distribution with wellbehaved tails and a single peak at the center of the distribution. Symmetric, is that distribution can be folded about an axis and the two sides almost coincide. The following table shows the numerical summary of Credit Balance: The P-value of the Credit Balance using the Anderson-Darling Normality Test is 0.400 and the A-Squared is 0.38. With the 95% Confidence Interval for Mean, Median, and St Dev are as followed: This graph show that the number of the customers current credit card balance on the store's credit card skews more to the left because the skewness is -0.150 and the kurtosis is -0.721 which makes it have lower value which indicates a lower, less distinct peak. D. Discuss your 3rd individual variable, using graphical, numerical summary and interpretation: Histogram of Size 16 14 F requency 12 10 8 6 4 2 0 1 2 3 4 Size 5 6 7 A histogram shows the distribution of data within the Size variable. In this Histogram graph of Size, it shows that the graph is not symmetrical. This histogram graph has a wider bell shape form. The skewness of this graph is skewed right. Size has a lower value of kurtosis which indicates a lower, less distinct peak. The following table shows the numerical summary of Income: The P-value of the Size using the Anderson-Darling Normality Test is .005 and the ASquared is 1.59. With the 95% Confidence Interval for Mean, Median, and St Dev are as followed: This graph shows that the size of two people per household is much higher than others. E. Discuss your 1st pairing of variables, using graphical, numerical summary and interpretation: Income ($1000) Income and Location Boxplot of Income ($1000) pairing; shows that the 70 Suburban generated higher income. The least location to 60 generated income is Rural. Urban location is somewhat 50 between Suburban and Rural. The N value for all 40 three location is 50. The Rural location shows that it 30 is shifted significantly to the lower end, it is positively 20 skewed. Also, this gives an Rural Suburban Urban estimate of the kurtosis of Location distribution. It is a wider box relative to the whiskers indicated a wider peak. For both the Suburban and Urban the box is shifted significantly to the high end, it is negatively skewed. Both, Suburban and Urban have thin box relative to the whiskers indicated that a very high number of cases are contained within the income. This signified a distribution with a thinner peak. For all three locations, there are no outliers. F. Discuss your 2nd pairing of variables, using graphical, numerical summary and interpretation Scatterplot of Income ($1000) vs Credit Balance($) 70 Incom ($1000) e 60 50 40 30 20 2000 3000 4000 Credit Balance($) 5000 6000 Which this scatterplot of income vs. credit balance all the dots are all in an upward trend which indicated that between those two relationships, they have a positive, close relationship. This means the more income a household has, the more credit balance the household will have. The higher the income, the more credit balance is cluster together, the lower income; the credit balance seems to be more spread out. G. Discuss your 3rd pairing of variables, using graphical, numerical summary and interpretation: Scatterplot of Credit Balance($) vs Years 6000 Credit Balance($) 5000 4000 3000 2000 0 5 10 Years 15 20 The dots are all over the place and form no pattern, credit balance vs. years does not have any relationship and the two variables are not correlated to one another. It shows there are a couple of outliers from 0-5 years; then from 5-20 years there are a wide spread of credit balance. The most Credit Balance is cluster together with the longer the customer live at the current location. The longer they live at the current location the more credit balance they will have. H. Conclusion: The years, income, and credit balance seems to be in connection with each other in one form or another. It seems to correlate that the longer the customer lives at the current location the more income and credit balance goes up. Customers living in Suburban and Urban areas seem to make more income which could lead to more credit balance with store. AJ DAVIS department store chains have lots of credit customers that mean from their customers are people living in Suburban and Urban and generated high income