Reference no: EM133190008

Case study: A Luxury Called Coffee

Filipinos have learned to live with the pandemic, and are now pummeling through another crisis of rising prices, highly influenced by the continuous surge of oil prices globally. 2020 had an inflation rate of 2.64%, a jump to 4.30% in 2021, and so far, a rate of 2.98% in 2022. It may seem that the rise in price of goods have normalized rate-wise, however, it is important to take note that this is a year-on-year comparison. For example, a kilogram of laundry detergent worth Php 50.00 in 2019, became Php 51.32 in 2020, then Php 53.53 in 2021, and then Php 55.12 in March 2022. Meanwhile, the minimum wage in the National Capital Region (Metro Manila) remains unchanged at Php 537 since 2018. A 5-peso increase in laundry detergent over 3 years may seem small, but inflation applies to all commodities: Rice, cooking oil, detergent, shampoo, soap, grocery items, etc. With all these compounding, the Filipino working class continues to take a beating by adjusting expenses, tightening belts, and shifting to cheaper options. According to the latest Family Income and Expenditure Survey by the Philippine Statistics Authority (PSA), 58.4% of Filipinos belong to the low-income class, with a monthly income (for a family of 5) ranging between Php 10,481 and Php 20,962. Fathers are exhausting all income opportunities, while mothers have also started with small online businesses - selling leche flan, homemade dishes, and other items online. Some children have temporarily delayed their studies to help out with their family, while others who are nearing graduation are pushing through for an opportunity to better help out with at least a degree. Manuel, a 42-year old construction foreman, along with his wife, Risa, a 40-year old mall parking attendant, are raising their children, Trisha, 20, a third year Engineering student under a scholarship in a state university, and Simeon, 11, a grade 5 student in a public elementary school near their home. They all live with the mother of Risa, Mother Josefa, a retired 63-year old, who remains at home to help with chores and the needs of the family. Together, Manuel and Risa bring home about a gross income of Php 28,000.00 - 35,000.00 monthly (before taxes), putting them just above the low-income class. In late March 2022, the couple have just finished paying the debts they incurred during the lockdown in 2020. With malls closed, and construction on pause, both did not have constant income back then. It was the monthly pension of Mother Josefa that provided for food back then, and the staggered payment of utilities that helped them keep the utilities in their home. Fortunately, they did not have to pay for rent, as Manuel inherited their 2-bedroom home in Cainta, Rizal from his late father. Otherwise, they will most likely end up having to live on the streets. Now that Trisha will be going back to limited face-to-face classes for lab classes, her mobility expenses will be a new add-on to the family's tight budget. The jump in fuel prices is currently taking a toll on the family. Wet market prices have either gone up for the same quantity of products, or have remained the same but with a less quantity. For example, the price of Kangkong remains at Php 20, but the weight is now a few grams less. A staple in the household is Coffee Barako. Manuel, Risa, and Mother Josefa, all hail from Batangas, and they have always found ways to find cheaper alternatives in brand and options as long as the coffee remains to be of the same quality. They don't eat out, and every cent of their income is accounted for. For them, it is the only luxury they allow for themselves. Trisha is also getting acquainted with the habit. For the family, the choice for coffee is a no-brainer, low effort decision. Because of the rise in price of fuel, delivery to the local store nearby was lessened from 2 deliveries per week to now only once. With the affordability and authenticity of the ground Coffee Barako coffee beans, the store usually sells out in 3-5 days. This store is also a community sari-sari store that can only afford limited stocks to keep their inventory moving. The family is now left with two options: 1) Buy in bulk to avoid losing out on stocks, or 2) shift to a different coffee option when there are no available options by the time they run out at home. After making several adjustments and computations, the couple have decided to temporarily try option 2, until they are able to save up on extra money to be able to buy in bulk. Benedict, one of Manuel's co-workers, suggested trying instant coffee, Barako Black - a newly released instant coffee with options for premium black blend, light blend, and a 3-in-1 blend. Manuel disliked the idea. He believes that instant coffee is not real coffee, and is a menace to coffee farmers, like his ancestors. However, given the tight spot he is in right now, he accepted the sachet offered by Benedict, with the intention to have Risa try it when he gets home. Upon arriving, despite his reluctance, he showed Risa the sachet, "Lets try it?" He pours hot water in a mug, and mixes the Barako Black instant coffee. Without looking at his wife, whom he feels is disappointed but obliged due to the situation, he took a sip. He was surprised that it tasted better than he expected, but he tried to keep his reaction hidden as he passed the mug to Risa. She took a sip, and sighed, "Mmmm... its alright." Manuel felt a bit of relief as he felt that he was betraying his love for ground Coffee Barako beans by feeling "ok" about this instant coffee. Mother Josefa comes out of the kitchen and onto the dining area. She sees the sachet. "Have you guys tried it? Risa said it's alright, I'll also try it" She takes a sip and confirms, Risa's initial reaction, "Yeah I think it's alright for an instant coffee." There was silence. "This can substitute our coffee whenever Coffee Barako is out of stock in the store." Mother Josefa adds. They all go about their evening without a final decision. 

Question:

Describe the hypothesis testing process of Manuel regarding the instant coffee.