This report provides an analysis of the selected performance parameters of FOODplus Supermarket using statistical techniques. The report covers insights on annual gross profit, wastage breakdown, sales variation, online sales revenue, and more.
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FOUNDATION SKILLS IN DATA ANALYSIS STUDENT ID: [Pick the date]
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EXECUTIVE SUMMARY Taking into cognisance the sample data of 150 FOODplus supermarkets, the average gross profit on an annual basis is computed at $ 1.027 million. The underlying deviation in gross profit for the sample supermarkets is quite high which is captured by the high value of range besides other measures of dispersion. For being eligible for the annual bonus, the concerned store manager should ensure that the annual gross profit must be atleast $ 3.135 million. The outliers refer to those values which are either too large or too small and such values are absent for the gross profit variable. The sample data highlights the generation of a higher average annual profit for FOODplus supermarkets that are open on Sunday in comparison to thosewhicharenotopen.Also,theonlinestorerelatedleadershipispossessedby supermarkets based in strips where the online store presence rate is better than mall based supermarkets. Analysing the category of wastage, it is fair to conclude that more than 50% fall in the medium category and lowest proportion falling in low waste category. This clearly reflects the scope of improvement in this regards. In explaining the variation in sales, the most influential factor has emerged as expenses on advertising.Besides, the number of staff also has emerged as a significant variable but the underlying influence and ability in explanation of sales variation is lesser for staff number than advertising expenses. Taking the sample data into consideration, the estimation of online sales revenue per store on an annual basis is expected to fall between ($0.30, $0.42) million. Also, of the 750 supermarkets owned by FOODplus, the proportion of supermarkets falling under low wastage category is expected to fall between (9.57%, 21.10%). The average increase in standard food basket across the 750 supermarkets does not seem to cross the inflation and hence is in confirmation with ACCC policies. It also can be concluded that population proportion of FOODplus supermarkets working on Sunday is lesser than 70%. The assertion with regards to the misrepresentation of certain specific states is correct. Further, the current sample size of 150 supermarkets is not found to be sufficient for the proportion of high wastage store determination with a margin of error of 6%.
Title: ANALYSIS OF PERFORMANCE OF FOODplus SUPERMARKET Introduction FOODplus is a leading supermarket chain in Australia which from the humble beginning made 27 years ago has now grown into a chain comprising of 750 national supermarkets. The general manager of the company is Paul Anderson who has provided some useful data from the annual survey for statistical analysis.Further, through a memorandum, the general manager has raised certain specific queries which need to be addressed in the capacity of a business analyst named Emma Thomas. In the wake of the above background, the primary objective of this report is to carry out an analysis of the selected performance parameters using the sample data comprised from 150 supermarkets. The use of statistical techniques in addressing the questions involves the use of both inferential and descriptive techniques depending on the precise requirement. Analysis & Conclusion The relevant discussion in regards to the FOODplus supermarkets is carried out below. (1) The annual gross profit summary is presented below. (a) Considering the given sample of FOODplus supermarkets, it becomes evident that mean gross profit on an annual basis has been derived as $ 1.027 million. This is slightly more than the corresponding median value at $ 0.972 million. The difference between the median and mean gross profit may be attributed to asymmetric distribution of annual gross profit. The measures of dispersion in context of gross profit highlight that variation is evident to be on the higher side. This is particularly supports from the high range of sample gross profits. Also, the presence of positive skew in the gross profit variable is expected owing to presence of certain supermarkets having gross profits significantly higher than the computed average value. b) It is noteworthy that the managers of only the 45 top stores as per gross profit are given bonuses from the total of 750 FOODplus supermarkets. The given data highlights that the supermarkets that fall within the top 0.06 percentile would be eligible for the bonus. Based on the given sample data, it is apparent that annual gross profit corresponding to 99.94 percentile is $3.135 million and therefore this would be the cut-off. c) In statistical terms, “unusual” indicates to values which tend to be exceptionally high or low and hence the corresponding probability of their occurrence is typically quite less (lower than 5%). The sample data gross profit is infact skewed with the presence of very high gross profit supermarkets. However, none of these could be termed as outlier in statistical terms. (2) (a) To estimate whether the supermarkets should keep open on Sunday or not, the annual average gross profit of the two groups of supermarkets may be compared where one opens on Sunday and the other remains close on Sunday. Average annual gross profit for the ones that
remain working on Sunday is computed at $1.097 million which is higher than the group of supermarkets that do not open on Sunday and have corresponding value of $0.913 million. Thus, it makes economic sense for the FOODplus supermarkets to work on Sunday thereby contributing to higher annual gross profit. (b) To determine whether supermarkets situated in malls have the leadership position with regardstotheonlinestores,acomparisonneedstobedrawnwiththeFOODplus supermarkets situated at other locations namely country and strip. Amongst the mall based supermarkets included in the sample, the online presence is witnessed in 67.74% of the supermarkets. The corresponding adoption rate for supermarkets located in country and strips is 60.42% and 77.50% respectively. These figures clearly refute the leadership claim of supermarkets based in malls in terms of online store presence as this position belongs to supermarkets based in strip. (c) For the FOODplus supermarkets sample data, wastage breakdown is to be computed. Under the low waste category, 15.3% of the sample supermarkets falls while more than 50% of the sample supermarkets generate waste labelling them as medium wastage. However, there are 30.67% of the supermarkets in the sample which tend to generate high wastage and thereby are a matter of concern. The company needs to contemplate various measures in this regards. The states that have maximum representation of high waste supermarkets are Queensland, Southern Australia and Victoria is order of decreasing representation.For the given sample, the identified three states tend to contain more than 50% of the supermarkets falling under the high wastage category. (3) The objective is to estimate the variables which tend to offer maximum explanation in relation to sales variation based on the sample data. The statistical analysis highlights that 70.6% of the changes in the sales is explained by corresponding changes in the expenses on advertisement. This is on expected lines since high advertising expenses leads to higher sales generation. Another variable which is significant is the number of staff whose changes can offer explanation to 54.17% of the changes in the sales amount. This is not surprising since the staff hired would be reflective of the potential business. With regards to the other variables i.e. number of car spaces and number of trading hours significance in terms of explaining sales variation is lesser as only 32% and 0.68% may be explained. The most crucial factor from the four factors discussed above is advertisement expenses since it leads to the highest explanation in sales variation. (4) (a) Based on the given sample data of 150 FOODplus supermarkets, the objective is to provide estimation of online sales per store for all the supermarkets of FOODplus. It may be concluded that the online sales per store on an average should fall in the interval defined by lower limit of $ 0.3 million and higher limit of $ 0.42 million. A key observation is that the average online sales per store is still very less when compared to the total annual sales which highlights the potential growth scope in online sales revenue in the near future. (b) The main objective is to highlight the proportion of all supermarkets run under FOODplus that generate low wastage. The statistical analysis highlights that 9.57% to 21.1% of the 750 FOODplus supermarkets generate low wastage. This value is still on the lower end and
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therefore presents significant scope for future improvements in waste management practices. With regards to NSW based FOODplus supermarkets, the proportion that would have low wastage would range between 5.90% and 29.99%. In context of Victoria based FOODplus supermarkets, the proportion that would have low wastage would range between 3.18% and 29.08%. The proportion of low waste category supermarkets does not differ between the three intervals stated above as there is overlapping evident between these. (5) (a) The objective is to assess if the average increase in prices across FOODplus supermarkets has exceeded $ 6.85 or not.In order to comment on the same, the increase in standard food basket from 2017 to 2018 would be considered for 150 supermarkets. The analysis of this data indicates that the average price increase over the year (i.e. 2017-2018) does not exceed $6.85and hence complies with ACCC requirement. (b) Considering the sample of 150 FOODplus supermarkets, the objective is to test whether the population proportion of 750 FOODplus supermarkets is atleast 70%. The sample data does not provide support to the claim and hence it may be concluded that less than 70% of all the FOODplus supermarkets are open on Sunday. Based on the given information, it is apparent that in the long run, 70% of all FOODplus supermarkets should open on Sunday or elsethesustainabilitywouldbeadverselyimpacted.Asaresult,changesshouldbe introduced in the policies of the company so as to introduce the requisite change to ensure long term sustainability. (6)(a)(i) It is imperative that the sample data should be representative of the underlying population which would require that each state should be fairly represented with inclusion of adequate supermarkets. Considering that the given data pertains to eight states, hence it makes sense that each stated should ideally possess a share in the vicinity of 12.5% with regards to supermarkets from the respective state. This is not the case in the given sample as some states are higher and others have lower representation. One state where the number of supermarkets chosen is higher than the desired 12.5% by a significant margin is Queensland which has a share of 18%. Amongst the states, there are others like Tasmania and Western Australiawherethesupermarketcontributiontothechosensampleis3%and11% respectively. Thus, the assertion made is supported by the sample data. (ii) Even though the company started 27 years ago, but still the given sample data does not present an anomaly. This is because with regards to supermarket business, the expansion in terms of chains is gradual only and does not exist from the beginning. As a result, it is quite plausible that few of the supermarkets that were opened in the initial years have not been included in the sample. This is especially the case as the sample size is only 20% of the overall population. (b) The current sample size is 150 which seems sufficient in order to determine the gross profit within $ 120,000 as the minimum computed sample size for this is only 148. However, in regards to the high wastage store proportion estimation with a margin of error of 6%, the given sample of 150 supermarkets would not suffice as the lowest sample size required is 227 which is much larger than the available sample size. Hence, the future survey would have to be mindful of this requirement.