Hypothesis Testing

                                                         HYPOTHESIS TESTING

A popular food outlet in ranchi has tie up with swiggy. The owner of outlet states from last year report of outlet that people opting for dinning is 40% of total customers. For couple of years the maintenance cost for the outlet, rent and facilities for customers has cost him much. The manager asks the marketing group to conduct a survey where they took a sample of 100 people depicting their interest about the way of having food from their restaurant. Now through hypothesis testing he wants know the customer interest towards dinning and online delivery so that he can take a decision to cut cost for maintenance and stop dinning in order to increase revenue or let it be as usual.

Objective:

To increase revenue of the outlet and find ways to lessen the operating cost.

A survey conducted for 100 people in the city to know their interest on the way of having food.

Variables:

Customer interest in having food from outlet is the variable. The two components are the customer opting for dinning or online order.

Sample size, n = 100.

Analysis:

Here we are using the proportion model as we have 1 variable and two components.

H0 : P = .6

H1 : P >.6

The favourable outcome, P = 60% or 0.6 (swiggy/online)

Similarly, Q = .4 (dinning)

From the sample we have say, p = .7 (swiggy)

Similarly, q = .3(dinning)

As the sample size is more than 30 we will use Z test.

Z = (p – P)/sqrt(pq/n)

   = (.7 - .6)/sqrt(.7*.3/100)

   = (.1/.045)

   =2.22 (observed value)

Level of significance is 2%

Hence, the critical value of Z = 2.05

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Assumption:

The data for 100 customers are collected on basis of customer’s choice for ordering food. Hence, the level of significance has been taken as 2 % which is the highest probability for type1 error to occur.