Forecasting Lost Sales
A local department store suffered heavy damage when a hurricane struck. The store was closed for four months (September through December) and the store is now involved with a dispute with its insurance company about the amount of lost sales during the time the store was closed. Two key issues must be resolved: (1) the amount of sales the store would have made if the hurricane had not struck and (2) whether the store is entitled to any compensation for excess sales due to increased business activity after the storm. More than $8 billion in federal disaster relief and insurance money came into the county, resulting in increased sales at department stores and numerous other businesses.
The sales data for the department store for the 48 months preceding the storm is provided in StoreSales file. The total sales for all deparment stores in the county is provided in the CountySales file. You have been asked to analyze these data and develop estimates of the lost sales at the department store for the months of September through December. They also asked you to determine whether a case can be made for excess storm-related sales during the same period. If such a case can be made, the department store is entitled to compensation for excess sales it would have earned in addition to ordinary sales.
Prepare a report for the manager of the department storm Mr. Ira that summarizes your findings, forecasts, and recommendations. Include the following:
- An estimate of sales for the department store had there been no hurricane.
- An estimate of countywide department store sales had there been no hurricane.
- An estimate of lost sales for the department store for September through December.
Upload your report to blackboard. Include any Excel files you used to determine your estimates.