Carmaletta Lewis, Darius Kellar, Janee Norman, Lynn Pham
Quantitative Reasoning for Business/501
March 11, 2013
Dr. Vinata Kulkarni
The team used the raw data from the University of Phoenix Summer historical inventory data and forecast to discuss the inventory system problems to determine the inventory system of American Motors. The team converted the time series data into an inventory analysis for American Motors.
Businesses face many decisions when trying to decide how to inventory the products that they sell. The economy, costs to store the goods and the ability to purchase the goods prior to the sale of them are all factors that must be considered. New car sales have declined over the last decade. They have their peak months and off months with sales. Even though car dealerships are not thought of as seasonal since they are used year round their sales reports reflect a different picture. Innovative marketing approaches and other selling techniques need to be utilized to increase sales in the lower sales volume months. Indices of the sector the organization is a part of and of your organization can be extremely useful for management when trying to project future sales. “This usefulness is both in terms of providing early information on current period economic conditions and providing information regarding future period economic conditions” (Chindamo, 2010). Organization
American Motors was formed in 1954 after a merger of Nash-Kevlvinator and Hudson Motors. This merger was the largest corporate merger of that time and worth $197,793,366. In 1956, the first automobile introduced to the public was the Rambler. The Rambler was accepted by the public but the design was very dated and thus, was not popular with consumers. Therefore, American Motors redesigned the Rambler in 1958 featuring stacked quad headlights, a long wheel base, and was top of the line from 1959 on. American Motors continued to have lows and highs throughout, and was eventually bought out by Chrysler in 1987. Chrysler continued to sell vehicles but was later sold to Mercedes and finally filed for bankruptcy in 2009. In 2009 Chrysler Group, LLC was formed to establish a global strategy alliance with Fiat. Chrysler Group, LLC produces Chrysler, Jeep, Dodge and Fiat. Inventory Problems
The increased gas prices and the problems with the economy have affected the sales of automobiles in the past five years. Because of the influxes of corporate bailouts, foreclosures and bankruptcies in the United States, banks are restricting the line of credits to individuals who have high credit scores. Those with lower scores are prone to pay higher interest rates or most unfortunate to not qualify for a loan. Therefore car dealers are experiencing difficulties moving the company’s inventory of vehicles ready to be sold or financed. Another reason for the inventory problem is the escalating gas prices. Because the country is experiencing high gas prices, individuals are now looking to buying a car that are more economical and not one that consumes a lot of fuel. This affects inventory of luxury cars with V-8 motors and SUV’s that since they get less mileage per tank of gas. Expected Benefits
The benefits of this inventory proposal are to determine the current sales of the company and use marketing tools to increase sales. The benefits of understanding the public demands and competition from other motor companies can help the management teams strategize for future concept cars and modifications of existing cars. As new cars are manufactured to be fuel efficiency vehicles and hybrids, Chrysler’s team can use this information to bring innovative designs with alternative fuel vehicles to the market. Increasing the sales for the company in the off season when sales usually slump to their lowest. This will address the major issue that the company is currently...