As business owners work to improve the products offered to their customers, they increasingly focus on the service they are providing as leverage to remain competitive in their field. Our case analysis this week is focused on the Spicy Wings Company. As a purveyor of chicken wings, they have crafted a great product, and profit margins support the popularity of the brand. With football season approaching, the proprietor has sought our expertise in reviewing his business data to support his theory that he may be able to guarantee a 30-minute delivery time on all orders, including those placed during a football weekend. If our analysis of the data supports his claim, he can move forward in his advertising efforts with confidence that all orders placed for delivery will be received within 30-minutes of the order, or the food is free. This claim, and our support through thorough financial vetting, will help our client remain in a firmly competitive position with the other food establishments that seek to capitalize on the volume of food orders for delivery that are available during the football season.
Our first order of business was to assess the sample data provided to us by the owner. We received 200 random samples, collected over five football weekends, of pickup time, drive time, and the total time. The total time was calculated as the sum of the pickup time and drive time for each sample provided. The pickup time reflected the amount of time from the moment an order was ready to the moment the order was picked up by a driver. It is important to note that calculations provided did not include the preparation time required of each order as the chicken wings are cooked and boxed in large volumes at a time prior to orders being placed. For our assessment, we are merely calculating the viability of the claim that, from the time the order is placed by the customer to the time they receive the order, the guaranteed timeframe is 30 minutes.
The initial calculations we reviewed of our sample population included the median (Q2), the lower quartile (Q1), the upper quartile (Q3), the smallest value in the distribution, and the largest value in the distribution. These five calculations are referred to as the five number summary (Black, 2016, p. 77).
As we further assessed our sample population, we calculated standard deviation, median, mode and determined the 95% confidence level. Our table below illustrates our findings and will be used to support our recommendation to our client.
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Based on our initial review, we then conducted a formal hypothesis test to demonstrate the validity of the delivery guarantee of 30-minutes. Below is a breakdown of the individual steps taken in this process.
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Our hypothesis testing was supportive of our client’s objective of being able to confidently advertise during the upcoming sports season that his company would be able to deliver orders within 30-minutes of the order being placed. As conscientious analysts, we took some additional steps to support this finding by calculating the likelihood of the hypothesis being valid and also to determine the probability that, in some instances, the order may take longer than 30 minutes.
Using our tools in Excel, we calculated =NORM.DIST (22.5226, 30, 4.8741, TRUE) (x = 22.5226, μ = 30, and s = 4.8741from the above calculations) to calculate the probability of an order taking longer than 30-minutes, it was found that there would be a 0.062501437, or a 6.3% chance of the order taking longer than 30 minutes.
Our recommendation is that our client should move forward with advertising the 30-minute delivery time. We also had an additional recommendation to provide that may support our client’s objective of remaining competitive during football season. While we have calculated with confidence his ability to support his claim, there is the 6.3% chance that a drive time may take longer. This outcome will not only result in the cost of a free order, but also in the damage to the integrity of the brand. Customers may order from another food establishment, instead of from Spicy Wings, if they feel service did not meet their expectations. One way to potentially offset this possibility may be to bring on more part time drivers during the weekends with increased volume.
Our findings based on our analysis of all the information presented to our client supports the finding that the Spicy Wings Company will be a firm competitor in the foodservice industry in his region during football season. His company, as a result of our findings, has moved forward with their advertising campaign to guarantee a 30-minute delivery for all food orders. We thanked our client for the opportunity to conduct this business review, and we look forward to analyzing his profit margins at the end of the year.
Black, K. (2016). Business Statistics: For contemporary decision making (9th ed.). Hoboken, NJ: John Wiley & Sons, Inc.