Conduct a formal hypothesis testing to help John decide whether to offer the delivery guarantee or not. Case Study – Spicy
Wings Case Study Following
his graduation from the MBA program at the University of Phoenix, John Tyler
wanted to live and work in the little town of Hood. However, the community was
small and there were not a lot of readily available opportunities for college
graduat
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Conduct a formal hypothesis testing to help John decide whether to offer the delivery guarantee or not.
Case Study – Spicy
Wings Case Study
Following
his graduation from the MBA program at the University of Phoenix, John Tyler
wanted to live and work in the little town of Hood. However, the community was
small and there were not a lot of readily available opportunities for college
graduates. Fortunately, John had some experience working in the food service
industry gained in summers and throughout high school at his uncle’s restaurant
in Franklin, a few miles away from the town of Hood. When John decided to
leverage his experience into a small delivery and take-out restaurant located
close to his home, he thought he had hit on a great idea. John would offer a
limited fare consisting of the buffalo wings his uncle had perfected at his
restaurant. John called his restaurant, Spicy Wings. Although success came
slowly, the uniqueness of John’s offering coupled with the growth of the
community made Spicy Wings a success.
John’s
business was pretty simple. John purchased wings locally. The wings were then
seasoned and prepared in John’s restaurant. Once an order was received, John
cooked the wings, which were then delivered or picked up by the customer.
John’s establishment was small, and there was no place for customers to dine in
the restaurant. However, his wings proved so popular that over time, John hired
several employees, including three delivery drivers. Business was steady and
predictable during the week, with the biggest days being home-game football
Saturdays.
A little
over a year ago, the little town of Hood began to grow and expand. John noticed
his business was beginning to suffer when other fast-food delivery restaurants
opened around the town. Some of these restaurants were offering guarantees such
as “30 minutes or it’s free.” John’s Spicy Wings now had to compete with fish
tacos, specialty pizzas, and gourmet burgers. Most of these new restaurants,
however, were dine-in establishments providing carry-out and delivery as a
customer convenience. However, John was certain he would need to offer a delivery
guarantee to remain competitive with the newer establishments.
John was
certain a delivery guarantee of “30 minutes or it’s free” could easily be
accomplished every day except on football Saturdays. John thought if he could
offer a 30-minute guarantee on his busiest day, he would be able to hold onto
and perhaps even recover market share from the competition. However, before he
was willing to commit to such a guarantee, John wanted to ensure that it was
possible to meet the 30-minute promise.
John
knew it would be no problem for customers to pick up orders within 30 minutes
of phoning them in. However, he was less confident about delivering orders to
customers in 30 minutes or less. Not only would the wings need to be cooked and
packaged, but the delivery time might be affected by the availability of
drivers. John decided he needed to analyze the opportunity further.
As a
part of his analysis, John decided to take a random sample of deliveries over
five different football weekends. Cooking time and packaging time were not
considered in his analysis because wings were not cooked for individual orders.
Rather, large numbers of wings were cooked at a single time and then packaged
in boxes of 12. John decided to focus his analysis on the time required to
deliver cooked and packaged wings. He collected information on the amount of
time an order had to wait for a driver (the pick-up time), as well as the
amount of time required to transport the wings to the customer (the drive
time). The sampled information is in the Excel® file, Spicy Wings
Data Set. John is not willing to offer the guarantee on football Saturdays,
unless he can be reasonably sure the total time to deliver a customer’s order
is less than 30 minutes, on average. John would also like to have an estimate
of the actual time required to deliver a customer’s order on football
Saturdays. Finally, John would like to know how likely it is the total time to
make a delivery would take more than 30 minutes. Based on the sampled data,
should John offer the guarantee? What percent of the Saturday deliveries would
result in a customer receiving a free order? What recommendations might help
John improve his Saturday delivery times?
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