This is assignment is answering 20 questions based on the background.
Please review the two PPT first, which is the important materials for this assignment. I have attached the two PPT with this order.
It is assessed on the accuracy and thoughtfulness of your responses.
For this assignment, we will be working on a business problem related to the retail clothing business. Specifically, a large chain of retail stores has to make decisions around planning its inventory. Managing inventory is fraught with uncertainties that can greatly impact the performance of the business.
The inventory for a product is the overall supply that is in the possession of the business and ready to sell. How much inventory to hold is a question of how well you can predict future sales. Each item has production costs, shipping costs, and storage costs that scale with the number of units produced. Items that are sold will produce revenue that more than covers the individual cost. However, unsold items have additional costs associated with storage and ultimately the removal of the inventory.
These risks of unsold inventory would seem to push a retail store to produce a smaller number of items. On the other hand, producing too few of an item also has its risks: unmet demand leads to lost opportunities for sales, which can also impact profits. Forecasting models can help to improve the process, so that prior data can be used to plan for production. However, any forecasted value will have a range of uncertainty.
To address these problems, retail stores can opt for a second round of production on items that appear to be exceeding the forecasted trends. The retail company can revise its forecasts based upon the recent volume of sales. Then they can decide how much more of an item to produce and take action in a timely fashion.
One of the critical decisions about a second round of production is how quickly to ship the products. There are two main options:
- Slow Shipping: Typical shipping may involve a slow process. It may take 6 weeks for a newly produced item to travel from the factory to the racks inside of the retail stores, especially with a global supply chain.
- Fast Shipping: A newly produced item can reach the stores much faster using air shipping. However, this option is also significantly more costly.
To simplify this setting, we are going to make the following assumptions:
- There are 100 separate products that have been identified as trending based on early sales data (1 month).
- The sales cycle for all of these products consists of a 6-month period during which the products are actively sold in the stores. As of this moment, there are 5 more months left in the sales cycle.
- Each product is reasonably similar. They are all t-shirts with the same production costs and the same suggested retail price.
- The retail company has a reliable forecast for each of these 100 products. All of the forecasts fall within an expected range that is understood by the company. Although some values are higher and others are lower, there are no systematic outliers or single items that will account for an outsized portion of the overall potential revenue.
- The shipping decisions can be made independently for each product. You can choose either fast or slow shipping in each case.
The managers of the operations division are unsure about whether to use slow shipping or fast shipping. They would like to use this group of 100 products to test their options. Then they can use the result of this investigation to inform their decisions about the shipping decisions for the second rounds of production in the future.
Based upon this information, please answer the following questions. Each question should be answered in complete sentences, usually in a short response (2-4 sentences). Even for questions that can be answered in a few words, it is helpful to provide a short explanation that better informs your audience (e.g. a business manager).
What are the overall goals of the business with regard to these products and the decisions they’re facing?
How would you describe the population of interest with regard to the overall goals of the business? Answer in a few sentences.
Which metric would you select to understand the performance of the products in meeting the goals of the business?
What are the advantages and disadvantages of the two shipping strategies?
What is the primary research question that we would like to address?
What is the independent variable for this research question?
What is the dependent variable for this research question?
In plain words, how would you state the null hypothesis associated with this research question?
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In mathematical notation, how would you write the null hypothesis associated with this research question? Make sure to define any metrics that you’re using.
In plain words, how would you state the alternative hypothesis associated with this research question?
In mathematical notation, how would you write the alternative hypothesis associated with this research question? Make sure to define any metrics that you’re using.
How would you design an experiment to study the research question?
Would your experimental design require any comparisons? If so, provide the details and explain why this comparison is necessary.
What conclusion would you draw if the null hypothesis is not rejected, and what kind of recommendation would it lead to?
What conclusion would you draw if the null hypothesis is rejected, and what kind of recommendation would it lead to?
How well does the design of your experiment help you evaluate the research question?
What are the potential limitations of your experimental design, both in terms of the analysis and for the business?
How well would the experimental results generalize to other products with regard to shipping decisions in a second round of production?
How do research design and analytics help to inform strategic management in this case study?
How would you convince a reluctant manager to undertake this research study? Write a persuasive argument (a few paragraphs) in favor of adopting this approach.