Business Statistics for Decision Making

This assignment delves into the application of business statistics across different organizational levels. It examines how MIS utilizes statistical information for strategic decision-making, tactical implementation, and operational control. The text highlights the importance of understanding key concepts like financial ratios, mean, mode, and median for effective decision-making in diverse business contexts.

BUSINESS DECISION MAKING

TABLE OF CONTENTS
Introduction..........................................................................................................................................
Task 1...................................................................................................................................................
Background..................................................................................................................................1
Rationale......................................................................................................................................1
Objective of Research..................................................................................................................2
Methodology................................................................................................................................2
Data analysis section....................................................................................................................3
Timeframe....................................................................................................................................3
Budget for the research................................................................................................................3
Questionnaire...............................................................................................................................4
Task 2...................................................................................................................................................
2.1 & 2.2 Mean, Mode and Median.............................................................................................4
2.3 Range and standard deviation................................................................................................5
2.4 Lower quartile and upper quartile (25th and 75th) and uses of percentile...............................6
2.4 Inter-quartile range................................................................................................................7
2.5 Computation of correlation and coefficient...........................................................................7
Task 3...................................................................................................................................................
3.1 Producing Column and bar graphs for total cost and total hour’s.........................................8
3.2 Line graph of total costs and number of orders.....................................................................9
3.3 Covered in PPT....................................................................................................................10
3.4 Business Formal Report.......................................................................................................10
Task 4.................................................................................................................................................
4A Prepare network diagram, compute duration and mark critical path...................................11
4B Investment appraisal techniques..........................................................................................13
4.1 Information processing tools...............................................................................................15
References..........................................................................................................................................

INTRODUCTION
Decision making is the integral part of business entity. Herein, managerial level people
are responsible for making smart and effective judgments for betterment of future contingency.
Present report emphasize on assessing the feasibility of expansion of Mortimer Chocolate
Company which offers quality of chocolate products (Aripin, Tower and Taylor, 2011). With the
aim of expanding business operations owner Adrian decided to launch a chocolate product with
different flavor. In this regard, current study emphasize on conducting market assessment along
with the social marketing strategy to establish demand for the new flavored chocolate. In doing
so researcher perform quantitative and qualitative data analysis. Along with this, present the
expected costs and expenditure through the means of graphical presentation. Lastly, with the
help of capital budgeting technique feasibility and reliability of investment proposal has been
carried out.
TASK 1
Background
In the present report, researcher focuses assessing the chocolate industry and the taste and
preferences of consumers to successfully launch new flavoured chocolate product. Having the
experience of over 20 years in the same industry, Adrian enters into the industry with successful
distribution of chocolate melt and fondue (Day, 2005). Looking at the constant growth of
Mortimer chocolate Company, entrepreneur aims at expanding the operations by launching
Cadbury with flavour. The target market for the product is prominently the kids who prefers
Cadbury with new flavours. There are several flavours available for the owner to mould its
chocolate products i.e. nuts, spices, flowers, coffee etc. Therefore, through the means of different
statistical techniques data generated has been assessed so that desired results can be made on the
launching of new chocolate product. Further, researcher focuses on evaluating the reliability of
investment proposals by using capital budgeting techniques.
Rationale
The main purpose of carrying of present report is to assess the taste and preferences of
consumers as well as market conditions for successful launch of Cadbury chocolate with new
flavour. Nowadays, people of all ages loves to eat Cadbury chocolates, mainly the kids thus,
Adrian owner of Mortimer Chocolate Company plans to launch Cadbury chocolate with new
flavour to address the changing taste and preferences of consumers. Therefore, researcher aim to
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provide adequate and reliable market assessment report to entrepreneur so that he can take
suitable and reliable decisions.
Objective of Research
Aim:
The main aim is to launch a Cadbury with flavour to satisfy changing taste and
preferences of consumers.
Objectives:
To achieve the above defined aim it is important for the investigator to frame varied
objectives that aids in addressing different prospects about the launch of Cadbury with new
flavour in effective and efficient manner.
 To conduct market assessment for identifying the taste and preferences of consumers
especially kids.
 To understand the social marketing strategy for the success of launch of new product.
 To perform quantitative and qualitative data analysis for making smart decisions.
 To conduct assessment investment proposals through investment appraisal techniques for
effective judgment.
Methodology
Looking at the nature of present study, methodology plays significant role. There are
several methods through the means of which investigator aims at achieving desired results and
outcomes. As per the present given case, researcher emphasize on using both primary and
secondary information to collected data regarding launch of Cadbury in new flavour (Ho, Liu
and Tsay, 2008). On the basis of this, random sampling has been undertaken as every individual
eats chocolate and can give their viewpoints. Herein, sample size of 50 respondents has been
selected for gathering wide range of information.
In this context, qualitative techniques will assist the course of researcher in understanding
the perception of people towards Cadbury as well as the taste and preferences. While on the
other hand, using quantitative techniques will help in gathering numerical data so that selection
of flavour can be made on the preferences of customers (Schraeder and Morrison, 2005). In
carrying out primary section, questionnaire will be provided to randomly selected people so as to
generate reliable and valuable information regarding the same.
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Data analysis section
In the current study, researcher will make use of statistical tools along with the thematic
analysis to analyse the collected information. Herein, thematic analysis will help in assessing the
subjective or qualitative information gathered through different sources while on the other hand,
statistical analysis will help in interpreting the numerical information so that best suitable flavour
can be selected as well as launch of Cadbury can be executed in the appropriate manner.
Timeframe
Activities/ duration in week 2 4 6 8 10 12 14 16
Analysing the contextual
Defining realistic objectives
Methodology
Collecting qualitative and
quantitative data
Data Analysis
Estimating budgets
Presenting whole project
Budget for the research
In order to carry out any project it is important for the investigator to define budget so
that expenditure can be managed and controlled (Swart, 2004). Following is the budget section
of conducting research on Cadbury launch project. According to the given scenario, estimated
budget is £1200 which is bifurcated in different elements which are as follows:
Expenses Amount
Research collection from secondary data £300
Research collection from Primary data £500
Stationary costs £200
Fuel Cost £120
Miscellaneous expenditure £80
Total £1200
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Questionnaire
For the purpose of gathering wide range of data, researcher emphasize on undertaking
survey methodology in which questionnaire method has been selected under which different
questions has been developed and distributed to randomly selected 50 people.
TASK 2
2.1 & 2.2 Mean, Mode and Median
Amount Spent
(£)
No. of customers
(f)
Mid-
value(x) fx
Cumulative Frequency
(CF)
10 – 12 60 11 660 60
12 – 14 120 13 1560 180
14 – 16 150 15 2250 330
16 – 18 200 17 3400 530
18 – 20 140 19 2660 670
20 – 22 110 21 2310 780
22 – 24 100 23 2300 880
24 – 26 120 25 3000 1000
1000 18140
With the help of above computation of descriptive statistics, different elements has been
evaluated to provide adequate amount of information to the entrepreneur of Mortimer Chocolate
Company for making decisions regard launch of new Cadbury product (Mean, mode and
median. 2015).
 Mean: In general, mean is the sum value of gathered information from different sources
(Williams, 2001). In the present case, mean of number of order received each day by the
Mortimer Chocolate Company, so that entrepreneur can make decision on the expansion
of new flavour.
Mean = Total of fx/ Total of number of customers
= 18140/1000
= 18.14 order per day
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 Mode: It refers to the number which frequently appears within the data series of gathered
information (Alkaraan and Northcott, 2013). In the present case, it is number of customer
each day. Herein, the amount spent by customers of £16-£18 has the highest frequency of
200. Henceforth, mode for the current study is:
Mode = 16 + (200-150) / 2(200) – (150-140)*2
= 16 + 50/400-290*2
= 16 + 50/110*2
= 16 + 0.91
= £16.91
 Median: In general terms, it is defined as the middle value of the collected information
(Berenson and et.al, 2012). Therefore, median of the current study is:
Median = lower limit + (60- CF of previous class interval)/Frequency * class interval
= 16 + (500-330)/200*2
= 16 + 170/400
= 16 + 0.42
= 16.42
2.3 Range and standard deviation
Amount Spent (£) No. of customers (f) Mid- value(x) X^2 fx^2 fx
10 – 12 60 11 121 7260 660
12 – 14 120 13 169 20280 1560
14 – 16 150 15 225 33750 2250
16 – 18 200 17 289 57800 3400
18 – 20 140 19 361 50540 2660
20 – 22 110 21 441 48510 2310
22 – 24 100 23 529 52900 2300
24 – 26 120 25 625 75000 3000
1000 144 2760 346040 18140
In general measure of dispersion can be defined as the statistical process with the help of
which researcher computes how wide spread the given set of data variables are in gathered
information. However, there are three major elements of measure of dispersion which are
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Standard deviation, Range and variance. Following are the calculation and illustration of all the
elements:
 Standard deviation: Through the means of standard deviation researcher can easily
identify the variance between gathered set of information (Black, 2011). According to the
present study, standard deviation amount spent on the purchase of Cadbury products.
Variance (S^2) = ∑Fx2 – ((∑Fx) 2 /n)/ n – 1
= 346040 – (18140)^2/1000/(1000-1)
= 346040-329059600/1000/999
= 346040-329059.6/999
= 16980.4/999
= 16.99
Standard deviation = √ Variance
= √16.99
= 4.12
 Range: This element of statistical tool assist in computing difference between highest
value and lowest value in the collected information or data (Loe, Ferrell and Mansfield,
2013).
Range = Greatest value – Lowest value
Range = 100 - 10
Range = £90
2.4 Lower quartile and upper quartile (25th and 75th) and uses of percentile
In statistical terms. Quartile and percentile distribute whole series into different sub-parts.
However, quartile aims at classifying the series of gathered information into four equal parts in
which each quartile indicates 25% of total population (Matsuzaki, Kumagai and Hayashi, 2016).
Further, it is denoted by Q1, Q2, Q3, Q4 wherein, Q2 illustrates middle value of (50%) which is
equal to median.
While on the other hand, percentile indicates total value that falls under the category of
given percentage of observation (Pozzi and et.al, 2015). Herein, 25th percentile and Q1 both
present 25% of the series while 75th percentile and upper quartile reflects Q3 of total values that
falls under the 75% of observations.
q1 = ∑F/4
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= 1000/4
= 250
Q1 = L1 + (∑F/4 – C)/F * class interval
= 14 + (250-180)/150*2
= 14+70/300
= 14.23
q3 = 3(∑F/4)
= 3(1000/4)
= 750
Q3 = L1+ [3(∑F/4)-C/F]*class interval
= 14 + 3(250)-180/150*2
= 14+750-180/150*2
= 14+570/300
= 14+1.9
= 15.9
Quartile Percentile Value
Lower quartile (Q1) 25th Percentile (P25) 14.23
Upper quartile (Q3) 75th Percentile (P75) 15.9
On the basis of above computation it has been evaluated that, 25% of total income is
amounted to 14.23 while on the other hand, 75% of total income is equal to 15.9.
2.4 Inter-quartile range
Inter-quartile range is calculated by determining the difference of lower and upper
quartile (Ho, Liu and Tsay, 2008).
IQR = (Q3-Q1)
IQR = (£15.9 - £14.23)
IQR = £1.67
2.5 Computation of correlation and coefficient
In correlation coefficient evaluates the relationship between the selected variables. In
other words it assist in assessing the strength and degree of relationship between two
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interdependent variables (Aripin, Tower and Taylor, 2011). For the present given scenario,
number of customers and sales of Mortimer Chocolate Company (Assumed) to evaluate the
correlation coefficient.
Frequency Sales
60 100
120 140
150 200
200 235
140 170
110 125
100 115
120 140
Particular Sales (Units) Number of customers (%)
Sales (Units) 1 0.96
Number of customers (%) 0.96 1
Interpretation:
On the basis of above computation it has been evaluated that, the correlation coefficient
between number of customers and sales is 0.96 which means both variables are highly correlated
to each other. In this case, if the number of customers increases, sales of the cited company also
increases.
TASK 3
3.1 Producing Column and bar graphs for total cost and total hour’s
On the basis of given information, entrepreneur of Mortimer Chocolate Company can
assess the total costs incurred during the month as well as total hours required to fulfill the
number of orders (Pozzi and et.al, 2015).
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1 2 3 4 5 6 7 8 9 10 11 12
13400 13335 13270 13400 13367 13990 14382 14088 13794
15362 16342
15068
960 955 950 960 957 1010 1050 1020 990 1150 1260 1120
Column graph
Total Cost (£) Total Hours
3.2 Line graph of total costs and number of orders
Line graph of total cost
J a nua ry
F e brua ry
Ma rc h
Apri l
Ma y
J une
J ul y
Aug us t
S e pt e m be r
O ct obe r
N ove m be r
De c e m be r
0
2000
4000
6000
8000
10000
12000
14000
16000
18000 f(x) = 1747.65692307692 x
Total Cost (£)
Line graph of number of orders
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J a nua ry
F e brua ry
Ma rc h
Apri l
Ma y
J une
J ul y
Aug us t
S e pt e m be r
O ct obe r
N ove m be r
De c e m be r
0
200
400
600
800
1000
1200
1400 f(x) = 134.76 x
Number of orders
3.3 Covered in PPT
3.4 Business Formal Report
To,
The Board of Directors of Mortimer Chocolate Company
Date: 8th July 2016
Subject: Information on future number of orders and total hours required to fulfil them
INTRODUCTION
Adrian focusing on expanding its business operations of chocolate by launching new
flavor of Cadbury. Therefore, report emphasize on evaluating the total costs incurred by firm
on its current Cadbury portfolios as well as the number of orders generated by the firm on
monthly basis. However, all these elements of cited firm has been evaluated and presented in
graphical manner so as to support the decision making of entrepreneur.
METHODOLOGY
To carry out the current study, different methods has been employed in which
statistical approach has been used to assess the numerical data gathered by the researcher.
Whereas, graphical presentation method has been used to present the outcomes on total costs,
total hours and number of order so that owner of Mortimer Chocolate Company can take smart
and effective decisions.
FINDINGS
Through the means of graphical presentation it has been evaluated that looking at the
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increasing demand of chocolate products cited firm will generate high number of orders in
coming months. Further, different people have different choices about the flavors thus it is
important to owner to consider the taste and preferences of people and accordingly make
decision regarding launch of new flavored Cadbury. Trend line clearly indicates that as the
production level company increases through the introduction of new flavor Cadbury its total
costs will also increase but at the same time number of orders will also increase.
CONCLUSION
In conclusion to the above report it can be said that owner of Mortimer Chocolate
Company should launch new Cadbury as its demand within the market is increasing at
significant pace. In addition to it, entrepreneur is recommended to invest in the launch of
flavored Cadbury as it will assist in generating higher revenues and profits.
TASK 4
4A Prepare network diagram, compute duration and mark critical path
Network diagram
Calculate project duration
Critical path:
1+4+6+7+8
1+4+6+8
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Critical path duration
Critical path Critical path duration Number of days
1+4+6+7+8 9+5+10+4+7 35 days
1+4+6+8 9+5+10+7 31 days
Marking critical path
Task Name Duration Start Finish Predecessors
Order machinery + delivery 9 days Fri 7/8/16 Wed 7/20/16
Recruit skilled staff 4 days Fri 6/3/16 Wed 6/8/16
Order supplies 4 days Fri 6/3/16 Wed 6/8/16
Install machinery 5 days Thu 7/21/16 Wed 7/27/16 1
Train staff 2 days Thu 6/9/16 Fri 6/10/16 2
Production 10 days Thu 7/28/16 Wed 8/10/16 3,4,5
Conduct pre-induction
advertising campaign 4 days Thu 8/11/16 Tue 8/16/16 6
Final in-store launch of
product 7 days Wed 8/17/16 Thu 8/25/16 7,6
Gantt chart:
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4B Investment appraisal techniques
Investment appraisal techniques can be defined as the approach of evaluating and
assessing the reliability and suitability of investment proposal (Advantage and disadvantage of
capital budgeting tools, 2016). There are several techniques available for the investigator to
assess the feasibility of the project.
Cash flows:
Year Net cash flow (£’000)
1 20
2 50
3 100
4 175
5 250
6 55
7 150
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Net present value:
This is the most common approach used by the managers in assessing the suitability of
proposal for the future investment (Matsuzaki, Kumagai and Hayashi, 2016). The main aim of
selecting NPV is that it considers time value for money.
Year Net cash flow (£000) PV factor @8% Amount (£000)
1 20 0.925 18.5
2 50 0.857 42.85
3 100 0.793 79.3
4 175 0.735 128.625
5 250 0.68 170
6 55 0.63 34.65
7 150 0.583 87.45
Total 561.375
Less initial investment 500
NPV 61.375
Internal rate of return
Years Cash flows
0 -500
1 20
2 50
3 100
4 175
5 250
6 55
7 150
IRR 11%
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Recommendation
On the basis of above computation of investment appraisal techniques it has been
evaluated that, entrepreneur of Mortimer Chocolate Company should invest in available proposal
as it is showing reliable results for the future contingency. Rationale behind this is that, net
present value of proposal is showing positive and high result of 61.375 whereas internal rate of
return of 11% indicates suitability of this project in investing.
4.1 Information processing tools
In the present era, constantly improving technology is making huge impact on the
activities of business enterprise. In this, Management Information System (MIS) has become one
of the integral element for businesses (Swart, 2004). In general, it can be defined as the process
of storing gathered information through electronic means. In context to firm, MIS used at
different level for different purpose which are as follows:
 Strategic level: Herein, MIS assist top level management by providing wide range of
information so that they formulate decisions and tactics regarding future prospects of
business enterprise.
 Tactical level: At this level, MIS helps the course of implementing the formulated tactics
in smart and effective manner (Day, 2005).
 Operational level: Line or functional managers require information relating to the regular
activities of firm so that they can manage and control the available resources in effective
and efficient manner (Schraeder and Morrison, 2005).
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REFERENCES
Journals and Books
Alkaraan, F. and Northcott, D., 2013. Strategic investment decision-making processes: the
influence of contextual factors. Meditari Accountancy Research. 21(2). pp.117-143.
Aripin, N., Tower, G. and Taylor, G., 2011. Insights on the diversity of financial ratios
communication. Asian Review of Accounting. 19(1). pp. 68 – 85.
Berenson, M. and et.al., 2012. Basic business statistics: Concepts and applications. Pearson
Higher Education AU.
Black, K., 2011. Business statistics: for contemporary decision making. John Wiley & Sons.
Day, A., 2005. Mastering Financial Mathematics with Excel: A Practical Guide for Business
Calculations. Financial Times/Prentice Hall.
Ho, J. C. L., Liu, S. C. and Tsay, J., 2008. "Further evidence on financial analysts' reaction to
enterprise resource planning implementation announcements". Review of Accounting and
Finance. 7(3) pp. 213 – 235.
Loe, T.W., Ferrell, L. and Mansfield, P., 2013. A review of empirical studies assessing ethical
decision making in business. In Citation Classics from the Journal of Business Ethics.
Springer Netherlands.
Matsuzaki, S.I.S., Kumagai, N.H. and Hayashi, T.I., 2016. Need for Systematic Statistical Tools
for Decision-Making in Radioactively Contaminated Areas. Environmental science &
technology.
Pozzi, R. and et.al., 2015. Using simulation for reliable investment appraisal: evidence from a
case study. International Journal of Operational Research. 23(1). pp.45-62.
Schraeder, M. and Morrison, R, 2005. Commander's evaluation in the context of business
decision-making: a multi-perspective approach. Development and Learning in
Organizations, 19 (4). pp.14 - 16
Swart, N., 2004. Personal Financial Mangement. Juta and Company Ltd.
Williams, S., 2001. Making Better Business Decisions: Understanding and Improving Critical
Thinking and Problem Solving Skills, SAGE.
Online
Advantage and disadvantage of capital budgeting tools, 2016. [Online]. Available through:
<http://smallbusiness.chron.com/advantages-disadvantages-payback-capital-budgeting-
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