ANALYSIS OF PROFIT MARGINS USING HYPOTHESIS TESTING

ENGINEERING PROBABINILTY AND STATISTICS

IE 6200 (Spring 2014)

Prof. Dr. Rajesh Jugulum

Submitted by:

ShreyasKarwa – NUID: 001906078

Parth Patel – NUID: 001753090

AniketThoolkar – NUID: 001759679

Dhyey Desai – NUID: 001759669

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Analysis of Profit Margins using Hypothesis Testing

TABLE OF CONTENTS

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ABSTRACT .................................................................................................................................... 2 2. METHODOLOGY ...........................................................................................................................

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2.1.

P-‐Diagram………………………………………………………………………………………………………………….3 2.2.

ANALYSIS OF S.O. DYES ..................................................................................................................... 4 2.3. REACTIVE BLUE SERIES ....................................................................................................................... 6 2.4. REACTIVE RED SERIES ........................................................................................................................ 8 2.5. K. E. BLACK SERIES ......................................................................................................................... 10 3. RESULTS:……………………………….. ………………………………………………………………………………………………..12 4.

LESSON LEARNT:……………………………………………………………………………………………………………………….13

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Analysis of Profit Margins using Hypothesis Testing

ABSTRACT

A company’s stock price, in general, is driven by the company’s ability to generate earnings.

Therefore, it is always useful for higher level management to analyze and assess its profitability.

One way to do this is by calculating and tracking various profit margins, which, in general, reflect how efficiently a company uses its resources. There can be many causes fueling a company’s need to analyze profit margins from time to time. These statistical analyses of profit margins of different products of a company allows the company to easily compare the profitability of different products as well as help in planning of future manufacturing and sales planning. This project aims at analyzing the profit margin data of AMTEX DYE CHEM, India, and establishing a hypothesis for increasing the profit by a stated percent and specifying the upper bounds of profit that the company may expect at 95% confidence interval. In this project, we have highlighted the effective use of statistical tools and software such as Minitab.

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Analysis of Profit Margins using Hypothesis Testing

METHODOLOGY

Our project deals with the hypothesis testing of profit (per kg) obtained through the export of four different series of products that the company manufactures. AMTEX DYE CHEM produces and exports various kinds of textile dyes. The cost and sales characteristics of the products were obtained from the sales department of the company. Our project objectives are two-fold:

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To illustrate the use of hypothesis testing to test the plausibility of an increased profit by

12% in the sample mean of the products.

To establish an upper bound to the profit that the company might expect at 95% confidence. P-Diagram

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Analysis of Profit Margins using Hypothesis Testing

We are considering four different series of dyes:

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S.O. Dyes

Reactive Red series

Reactive Blue series

K.E. Black series

1. Analysis of S.O. Dyes

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No.

Quant

Sales Value

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