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Kroger coupon program: decision of uncertainty

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Research statistical data within a business context that requires a decision to be made. Then, use probability on your researched data to formulate a decision.

Explain your research methods and process for limiting the uncertainty within the decision. Discuss your results in an in-depth narrative. Be sure to explain the following in your paper:

o The method you used to apply the concepts from the example scenario to formulate your business decision of uncertainty
o The appropriate probability concepts and your application of them to find data that limited the uncertainty of this business decision
o Identifications of each discrete outcome from your statistical analysis, providing a statistical rationale for each
o The trade-offs between accuracy and precision required by the use of various probability concepts and the effect on your data

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Solution Summary

Your tutorial gives you a scenario decision of whether to issue coupons to Kroger customers. Computations are in Excel and commentary guides you through the decision.

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To issue coupons or not at Kroger:

Decision

I work at Kroger. The store sends out coupons occasionally to try to increase customer loyalty and increase purchases for non-food items. But, of course, the coupons cost money to print and mail out and discounts hurt profit margins. So, the question is, do the customers increase their non-food purchases as a result of the coupons? Do they use the coupons at all? Are we better off sending out the coupons? If the customer just use the coupons to lower their normal food bill, we are worse off as food margins are very tight. If they use the coupons on non-food items, we are better off as the margins on those are more generous. So, I want to know what is the probability that they will use coupons on non-food items and make the coupons a good ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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