Forecasting Lost Sales Case Study
Tiffany Henault
March 3rd, 2015
Quan901-CH2
Forecasting Lost Sales
Case Study
Section I: Summary
Carlson Department store suffered heavy damage from a hurricane on August 31. As a result the store was closed for four months, September through December. Carlson is in dispute with its insurance company regarding the lost sales for the length of time the store was closed.
Section II: Problem Identification
Two issues to address are the amount of sales Carlson department store would have made if there had been no hurricane and if they are entitled to any compensation for excess sales due to increased business activity after the storm.
One further important factor is that eight billion dollars in federal disaster relief and insurance money came in to the county which in turn increased sales at department stores and numerous other businesses in the area.
Section III: Approach:
The method to be used is forecasting with seasonality in order to obtain approximate sales data for the months that Carlson was closed.
Section IV: Data
Sales for Carlson Department Store ($ Millions) Figure 6.1
Month
Year One
Year Two
Year Three
Year Four
Year Five
January
1.45
2.31
2.31
2.56
February
1.8
1.89
1.99
2.28
March
2.03
2.02
2.42
2.69
April
1.99
2.23
2.45
2.48
May
2.32
2.39
2.57
2.73
June
2.2
2.14
2.42
2.37
July
2.13
2.27
2.4
2.31
August
2.43
2.21
2.5
2.23
September
1.71
1.9
1.89
2.09
October
1.9
2.13
2.29
2.54
November
2.74
2.56
2.83
2.97
December
4.2
4.16
4.04
4.35
Department Store Sales for the County ($ Millions)
Figure 6.2
Month
Year One
Year Two
Year Three
Year Four
Year Five
January
46.8
46.8
43.8
48
February
48
48.6
45.6
51.6
March
60
59.4
57.6
57.6
April
57.6
58.2
53.4
58.2
May
61.8
60.6
56.4
60
June
58.2
55.2
52.8
57
July
56.4
51
54
57.6
August
63
58.8
60.6
61.8
September
55.8
57.6
49.8
47.4
69
October
56.4
53.4
54.6
54.6
75
November
71.4
71.4
65.4
67.8
85.2
December
117.6
114
102
100.2
121.8
Linear Trend-Carlson Department Store
Figure 6.3
March 3rd, 2015
Quan901-CH2
Forecasting Lost Sales
Case Study
Section I: Summary
Carlson Department store suffered heavy damage from a hurricane on August 31. As a result the store was closed for four months, September through December. Carlson is in dispute with its insurance company regarding the lost sales for the length of time the store was closed.
Section II: Problem Identification
Two issues to address are the amount of sales Carlson department store would have made if there had been no hurricane and if they are entitled to any compensation for excess sales due to increased business activity after the storm.
One further important factor is that eight billion dollars in federal disaster relief and insurance money came in to the county which in turn increased sales at department stores and numerous other businesses in the area.
Section III: Approach:
The method to be used is forecasting with seasonality in order to obtain approximate sales data for the months that Carlson was closed.
Section IV: Data
Sales for Carlson Department Store ($ Millions) Figure 6.1
Month
Year One
Year Two
Year Three
Year Four
Year Five
January
1.45
2.31
2.31
2.56
February
1.8
1.89
1.99
2.28
March
2.03
2.02
2.42
2.69
April
1.99
2.23
2.45
2.48
May
2.32
2.39
2.57
2.73
June
2.2
2.14
2.42
2.37
July
2.13
2.27
2.4
2.31
August
2.43
2.21
2.5
2.23
September
1.71
1.9
1.89
2.09
October
1.9
2.13
2.29
2.54
November
2.74
2.56
2.83
2.97
December
4.2
4.16
4.04
4.35
Department Store Sales for the County ($ Millions)
Figure 6.2
Month
Year One
Year Two
Year Three
Year Four
Year Five
January
46.8
46.8
43.8
48
February
48
48.6
45.6
51.6
March
60
59.4
57.6
57.6
April
57.6
58.2
53.4
58.2
May
61.8
60.6
56.4
60
June
58.2
55.2
52.8
57
July
56.4
51
54
57.6
August
63
58.8
60.6
61.8
September
55.8
57.6
49.8
47.4
69
October
56.4
53.4
54.6
54.6
75
November
71.4
71.4
65.4
67.8
85.2
December
117.6
114
102
100.2
121.8
Linear Trend-Carlson Department Store
Figure 6.3
References: Anderson, D. R., Sweeny, D., Williams, T., Cann, J., Cochran, J., Fry, M., & Ohlmann, J. (2013). Quantitative Methods For Business. Mason, OH: South-Western Cengage Learning.