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Unit4 Assignment FreshMart

The document outlines how FreshMart Groceries utilizes probability and statistics to enhance operations, focusing on customer product choices, revenue predictions, and quality checks. It validates a discrete probability distribution for snack purchases, calculates expected revenue and standard deviation for juice sales, and applies the binomial distribution for quality control in bread production. The conclusion emphasizes the importance of these statistical methods in providing data-driven insights for efficient store management.

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321 views2 pages

Unit4 Assignment FreshMart

The document outlines how FreshMart Groceries utilizes probability and statistics to enhance operations, focusing on customer product choices, revenue predictions, and quality checks. It validates a discrete probability distribution for snack purchases, calculates expected revenue and standard deviation for juice sales, and applies the binomial distribution for quality control in bread production. The conclusion emphasizes the importance of these statistical methods in providing data-driven insights for efficient store management.

Uploaded by

ppszp8142
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Unit 4 Assignment: Discrete Probability and Decision-Making at FreshMart

As a data analyst at FreshMart Groceries, I’ve been asked to use probability and statistics to
help the store improve operations. This includes studying how customers choose products,
predicting revenue, and checking product quality. Below, I explain how probability
distribution, expected value, and the binomial distribution can support decision-making in a
real-world retail setting.

Question 1: Validating a Discrete Probability Distribution


FreshMart has been tracking the likelihood of customers buying one of four snack options:
chips (0.35), cookies (0.30), nuts (0.20), and crackers (0.15). To determine if this is a valid
discrete probability distribution, we need to check two rules:

1. Each probability must be between 0 and 1 ✔️


2. The total of all probabilities must equal 1 ✔️

0.35 + 0.30 + 0.20 + 0.15 = 1.00

Since both rules are satisfied, this is a valid distribution. If these values added up to
anything other than 1, it would suggest that the data is either incomplete or contains errors,
which could mislead decisions such as stock ordering or shelf placement.

Question 2: Calculating Expected Value and Standard Deviation


FreshMart sells fresh juice in three sizes: small ($3.50), medium ($5.00), and large ($7.00).
Based on past sales, the probabilities of each size being bought are 0.4, 0.35, and 0.25
respectively.

To estimate the expected revenue per juice purchase, we use:


E(X) = ∑ [x × P(x)] = (3.50 × 0.40) + (5.00 × 0.35) + (7.00 × 0.25) = 1.40 + 1.75 + 1.75 = $4.90

So, the average expected revenue is $4.90 per juice sale.

To find the standard deviation, we calculate:


σ = √[∑ P(x) × (x - μ)²] = √[(0.40)(3.50 - 4.90)² + (0.35)(5.00 - 4.90)² + (0.25)(7.00 - 4.90)²]
= √[0.784 + 0.0035 + 1.1025] = √1.89 ≈ 1.37

Therefore, the standard deviation is approximately $1.37, showing how much actual sales
may vary from the average.

Question 3: Using the Binomial Distribution for Quality Control


In FreshMart’s bakery, the quality control team checks loaves of bread, and 90% usually
meet the quality standards. To maintain consistency, they randomly inspect 12 loaves from
each batch.
a. What’s the probability that exactly 10 out of 12 loaves pass the test?
Using the binomial formula: P(X = 10) = C(12, 10) × (0.9)^10 × (0.1)^2 = 66 × 0.3487 × 0.01
≈ 0.2299
So, there’s about a 22.99% chance that exactly 10 loaves meet the quality standard.

b. What’s the probability that at least 8 out of 10 loaves pass?


P(X ≥ 8) = P(8) + P(9) + P(10) = 0.1937 + 0.3874 + 0.3487 = 0.9298
So, there’s a 92.98% chance that at least 8 loaves pass quality inspection.

Conclusion
By using probability tools, FreshMart can understand customer behavior, estimate revenue,
and maintain quality. Discrete distributions help track buying patterns. Expected value and
standard deviation help predict income and manage pricing. The binomial distribution is
perfect for handling pass/fail scenarios like quality control. These methods give FreshMart
data-driven insights to run the store more efficiently.

References
Illowsky, B., Dean, S., et al. (2023). Introductory Statistics 2e. OpenStax.
https://openstax.org/details/books/introductory-statistics-2e
Grant, C. M. (2022). Probability and Distribution Videos. YouTube.

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