Background A restaurant chain specializing in ice cream deserts contacted you to characterize the market for new franchise locations in Upstate NY. The firm is located in the Southwestern US, and has excellent experience there. However, they are opening a few test locations in Buffalo, Syracuse and Albany in the very near future, and have hired you, an Upstate NY statistical consultant, to collect and analyze the results. These restaurants follow a standard blueprint for design, operation, and location. They run a 2,150 sq foot facility in wealthier suburban areas, and usually locate in new plazas near other specialty restaurants that tend not to compete with them (Starbucks, Panera, Fridays, and similar restaurants.) Existing Southwestern locations take in an average of $82,000 a week in sales, with a highly reliable standard deviation of $5,200. Before deciding on their regional distribution strategy, the firm is opening three test restaurants, one in each city. They want you to examine the weekly revenue data and characterize the regional market for their restaurants. Analysis For each of the following three situations, show an experimental design, which includes, at a minimum: a) Indicate whether this is a one-tail or two-tail test, and why. Sketch the problem. b) State your hypotheses c) Identify the level of significance (with justification) d) State the ramifications of the two types of errors, specific to this business. You decided to buy your friend an ice cream for lunch at your favorite upscale ice cream parlor about ten miles away from the office. It was wintertime, and you noticed for the first time just how many local ice cream restaurants and stands there were in your area. Funny, they were almost all closed during the winter months. Despite the cold weather you had to wait a couple minutes for a table to clear at the parlor. You mention to an employee that you must have hit a busy day, but they respond that it’s not unusually busy today. You start to think about the conversation you had earlier with the Sr. VP, and you wonder if he or you, or anyone at your client firm really understands the local market at all. You are not really sure if sales locally will be any different than in Southwestern markets. Show a design that reflects this line of thought.

Question

Background

A restaurant chain specializing in ice cream deserts contacted you to characterize the market for new franchise locations in Upstate NY. The firm is located in the Southwestern US, and has excellent experience there. However, they are opening a few test locations in Buffalo, Syracuse and Albany in the very near future, and have hired you, an Upstate NY statistical consultant, to collect and analyze the results. These restaurants follow a standard blueprint for design, operation, and location. They run a 2,150 sq foot facility in wealthier suburban areas, and usually locate in new plazas near other specialty restaurants that tend not to compete with them (Starbucks, Panera, Fridays, and similar restaurants.) Existing Southwestern locations take in an average of $82,000 a week in sales, with a highly reliable standard deviation of $5,200. Before deciding on their regional distribution strategy, the firm is opening three test restaurants, one in each city. They want you to examine the weekly revenue data and characterize the regional market for their restaurants.

Analysis

For each of the following three situations, show an experimental design, which includes, at a minimum:

a) Indicate whether this is a one-tail or two-tail test, and why. Sketch the problem.
b) State your hypotheses
c) Identify the level of significance (with justification)
d) State the ramifications of the two types of errors, specific to this business.

You decided to buy your friend an ice cream for lunch at your favorite upscale ice cream parlor about ten miles away from the office. It was wintertime, and you noticed for the first time just how many local ice cream restaurants and stands there were in your area. Funny, they were almost all closed during the winter months. Despite the cold weather you had to wait a couple minutes for a table to clear at the parlor. You mention to an

employee that you must have hit a busy day, but they respond that it’s not unusually busy today. You start to think about the conversation you had earlier with the Sr. VP, and you wonder if he or you, or anyone at your client firm really understands the local market at all. You are not really sure if sales locally will be any different than in Southwestern markets. Show a design that reflects this line of thought.