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Citywide Spirits Shoppe
Transcript of Citywide Spirits Shoppe
Group 4 Consulting, Inc.:
What is a Contribution Margin?
is the amount remaining from S
have been deducted.
CM = SR - VC
What Closing Time Maximizes Profit?
Maximum Yearly Profit = $ 38,959.20
What should Citywide Spirits do?
Two-tailed T-test: a statistical test in which the critical area of a distribution is two sided and tests whether a sample is either greater than or less than a certain range of values.
What is a Two-Tailed Test?
A statistical test in which the critical area of a distribution is two sided and tests whether a sample is either greater than or less than a certain range of values.
the mean Day customer purchase is equal to the mean Evening customer purchase
the mean Day customer purchase is not equal to the mean Evening customer purchase
: μ1 = μ2
: μ1 = μ2
T-value : -1.395
T Critical value : approximates ± 2.002
-2.002 < t-value < 2.002
= probability of getting a sample statistic as extreme (or more extreme) than the sample statistic you got from your sample, given that the null hypothesis is true
P (T≤ t) two-tail : 0.1681
The chance that two sample are equal is 16.81%
if p-value > significance level (alpha=0.05)
0.1681 > 0.05 (p-value significance level)
Annual Breakeven Number for 4:00 AM
Annual Breakeven Number for 2:00 AM
Annual Safety Margin for 2:00 AM
What is a Safety Margin?
Straight Line Depreciation
What is a Breakeven Number?
The depreciation value is calculated by dividing the value of the asset by the useful life of the asset.
The amount by which a company's sales could decrease before losing profit.
The amount by which a company's sales is exactly enough to cover it's expenses.
: μ1 = μ2;
: μ1 ≠ μ2
= 0.05 (probability distribution for a 95% confidence level)
We conclude that there is no significant difference between the average of the day customers' and evening customers' purchases.
Can now sell alcohol until 4am
Losing money in recent years
Should the shop extend its hours?
What is the most profitable closing time?
Operations Manager, Janice Wilton, will further investigate
Must take into account any additional costs associated
Janice predicts the best closing time to be 4:00 AM
Janice's Original Chart
Do Evening Customers Purchase More than the Day Customers?
Marginal Revenue > Marginal Cost
Annual Safety Margin for 4:00 AM
How long should Citywide Spirits Shoppe extend its hours of operation?
Source of Demand
The Power of External Environments
Customer Opportunity Costs
Closing at 2:00 AM
(null): y-intercept = 0
: y-intercept ≠ 0
y-intercept represents the purhase costs
(0.05); fail to reject the null
(0.05); reject the null
Marginal Revenue & Marginal Cost
P-value = 0.539
Fail to reject the null (
: y-intercept = 0
y = 0.7327x + 0.6848
R Square = 0.8743
Turn off and put away cell phones and devices
Refrain from talking
Save all questions until the end of presentation
Does Citywide Spirits Shoppe Have A Constant Contribution Margin?
Contribution Margin: Conclusion
Y-intercept = 0.
If an intercept is equal to 0, there are no Fixed Costs.
No fixed costs justifies a constant contribution margin.
Contribution Margin is Constant
What is a Null Hypothesis Test?
The main purpose of a hypothesis testing is the difference between two competing hypotheses about the value of a population parameter.