Project - Cold Storage Case Study

Assignment Report

Submitted By
Ankur Jain
 Table of Contents
1 Project Objective.............................................................................................................................3
2 Problem 1.........................................................................................................................................3
3 Problem 1 Solution – Step by step approach ..................................................................................3
4 Problem 2.........................................................................................................................................4
5 Problem 2 Solution – Step by step approach...................................................................................5
 1 Project Objective
The objective of the report is to Solve SMDM Project Problem 1 using dataset
Cold_Storage_Temp_Data.csv and Problem 2 using dataset Cold_Storage_Mar2018.csv

2 Problem 1
Cold Storage started its operations in Jan 2016. They are in the business of storing Pasteurized Fresh
Whole or Skimmed Milk, Sweet Cream, Flavored Milk Drinks. To ensure that there is no change of
texture, body appearance, separation of fats the optimal temperature to be maintained is between 2
deg - 4 deg C.

In the first year of business they outsourced the plant maintenance work to a professional company
with stiff penalty clauses. It was agreed that if it was statistically proven that probability of
temperature going outside the 2 degrees - 4 degrees C during the one-year contract was above 2.5%
and less than 5% then the penalty would be 10% of AMC (annual maintenance case). In case it
exceeded 5% then the penalty would be 25% of the AMC fee. The average temperature data at date
level is given in the file “Cold_Storage_Temp_Data.csv”

1. Find mean cold storage temperature for Summer, Winter and Rainy Season (5 marks)
2. Find overall mean for the full year (5 marks)
3. Find Standard Deviation for the full year (5 marks)
4. Assume Normal distribution, what is the probability of temperature having fallen below 2 deg
C? (5 marks)
5. Assume Normal distribution, what is the probability of temperature having gone above 4 deg C? (5
marks)
6. What will be the penalty for the AMC Company? (5 marks)

3 Solution Problem1 – Step by step

Setting work Directory and Adding Data.

> setwd("D:/R Data")

> library(utils)
> mydata = read.csv("Cold_Storage_Temp_Data-1.csv",header = TRUE)

1. Find mean cold storage temperature for summer, winter and Rainy Season
Mean temperature Values Season wise:
Summer: 3.153
Rainy: 3.039
Winter: 2.701

> by(mydata,INDICES = Season,FUN = summary)

Season: Rainy
Season Month Date Temperature
Rainy :122 Aug :31 Min. : 1.00 Min. :1.700
Summer: 0 Jul :31 1st Qu.: 8.00 1st Qu.:2.500
Winter: 0 Jun :30 Median :16.00 Median :2.900
Sep :30 Mean :15.75 Mean :3.039
Apr : 0 3rd Qu.:23.00 3rd Qu.:3.300
Dec : 0 Max. :31.00 Max. :5.000
(Other): 0
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 -----------------------------------------------------------------------
------------
Season: Summer
Season Month Date Temperature
Rainy : 0 Mar :31 Min. : 1.00 Min. :2.500
Summer:120 May :31 1st Qu.: 8.00 1st Qu.:2.800
Winter: 0 Apr :30 Median :15.50 Median :3.200
Feb :28 Mean :15.53 Mean :3.153
Aug : 0 3rd Qu.:23.00 3rd Qu.:3.400
Dec : 0 Max. :31.00 Max. :4.100
(Other): 0
-----------------------------------------------------------------------
------------
Season: Winter
Season Month Date Temperature
Rainy : 0 Dec :31 Min. : 1.00 Min. :1.900
Summer: 0 Jan :31 1st Qu.: 8.00 1st Qu.:2.400
Winter:123 Oct :31 Median :16.00 Median :2.600
Nov :30 Mean :15.88 Mean :2.701
Apr : 0 3rd Qu.:23.50 3rd Qu.:2.900
Aug : 0 Max. :31.00 Max. :3.900
(Other): 0

2. Find overall mean for the full year

Mean Temperature for full Year is: 2.9627
> mean(Temperature)
[1] 2.96274

3. Find Standard Deviation for the full year

Standard Deviation for full year is: 0.5085
> sd(mydata$Temperature)
[1] 0.508589

4. What is the probability of temperature having fallen below 2 deg C

> x=pnorm(2,mean = 2.9627, sd = .5085)

> x
[1] 0.02916462
Probability of temperature fallen below 2 deg C is 2.91%.
5. What is the probability of temperature having gone above 4 deg C
> y=1-pnorm(4,mean = 2.9627, sd = .5085)
> y
[1] 0.02067908
Probability of temperature gone above 4 deg C is 2.06%.

6. What will be the penalty for the AMC Company

probability of temperature going outside the 2 degrees - 4 degrees C during the one-year = (x+y)
0.02916 + 0.2067
0.04983 means 4.983 % which is above 2.5 and less than 5% hence penalty will be 10%.

4 Problem 2
In Mar 2018, Cold Storage started getting complaints from their Clients that they have been getting
complaints from end consumers of the dairy products going sour and often smelling. On getting these
complaints, the supervisor pulls out data of last 35 days temperatures. As a safety measure, the
Supervisor has been vigilant to maintain the temperature below 3.9 deg C.

Assume 3.9 deg C as upper acceptable temperature range and at alpha = 0.1 do you feel that there is
need for some corrective action in the Cold Storage Plant or is it that the problem is from procurement
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side from where Cold Storage is getting the Dairy Products. The data of the last 35 days is in
“Cold_Storage_Mar2018.csv”

[Use the same standard deviation that you have calculated from the first problem wherever you
think is necessary]

1. State the Hypothesis, do the calculation using z test (10 marks)

2. State the Hypothesis, do the calculation using t-test (10 marks)
3. Give your inference after doing both the tests (10 marks)

5 Solution Problem 2 – Step by step

Setting work Directory and Adding Data.

> setwd("D:/R Data")

> library(utils)
> mydata1 = read.csv("Cold_Storage_Mar2018-1.csv",header = TRUE)
> attach(mydata1)
> summary(mydata1)
Season Month Date Temperature
Summer:35 Feb:18 Min. : 1.0 Min. :3.800
Mar:17 1st Qu.: 9.5 1st Qu.:3.900
Median :14.0 Median :3.900
Mean :14.4 Mean :3.974
3rd Qu.:19.5 3rd Qu.:4.100
Max. :28.0 Max. :4.600

Mean = 3.974, Mu = 3.9, N = 35, Standard Deviation is 0.5086(from problem 1)

Null Hypothesis H0:mu <= 3.9
Alternate Hypothesis H1:mu> 3.9

1. State the Hypothesis, do the calculation using z test

Calculated Z Value = 0.86
For alpha =0.1 critical Z values is 1.28
Since calculated Z value is lesser then the Critical Z Value and z value falls in Hypothesis
accepted Region hence fail to reject Null Hypothesis for 90% confidence level.

2. State the Hypothesis, do the calculation using t-test

Calculated P stat Value = 2.75 using standard deviation(0.1596) of the of sample
Pvalue is 0.19790

sd(mydata1$Temperature)
[1] 0.159674
> Pstat.calculated = 2.75
> pnorm(2.75)
[1] 0.9970202
> pvalue = (1 - pt(0.86,34))
> pvalue
[1] 0.1979064
> t.test(mydata1$Temperature, mu = 3.974286, conf.level = 0.9)

One Sample t-test

data: mydata1$Temperature
t = -1.0586e-05, df = 34, p-value = 1
alternative hypothesis: true mean is not equal to 3.974286
90 percent confidence interval:
3.928648 4.019923
sample estimates:
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 3.974286
Hence Alternate Hypothesis is true.

3. Give your inference after doing both the tests

Both Z test shows that fail to reject Hypothesis, so decision should be the problem is from
procurement side .
And P test shows we Null Hypothesis is Rejected and alternate hypothesis is true so decision should
be there is need for some corrective action in the Cold Storage Plant.
Both Test are showing different results. So We now look at the sample size that is only 35 which
small so P test is more significant in this case So we Accept T test Result Hence there is need for
some corrective action in the Cold Storage Plant.

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