Lost Sales Forecast
TERM- PAPER
Lost Sales Forecast
Table of Contents
Introduction 3
Carlson Department Store Sales data for September 1992 through August 1996 4
Countywide Department Stores Sales data for September 1992 through August 1996 5
Choosing the appropriate forecasting method 6
Trend and Seasonal Components in Forecasting 7
An estimate of lost sales for the Carlson Department Store 10
Conclusion 10
Introduction
The Carlson Department Store suffered heavy damage when a hurricane struck on August 31, 1996. The store was closed for four months (September 1996 through December 1996) causing our sales drop to $0. The task of this report is to analyze sales in our department store in past 48 months and develop estimates of the lost sales at the Carlson Department Store for the months of September through December 1996. The Carlson Department Store is involved in a dispute with insurance company concerning the amount of lost sales during the time the store was closed. Two key issues must be resolved: 1) The amount of sales Carlson would have made if the hurricane had not struck, and 2) Whether Carlson is entitled to any compensation for excess sales from 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.
Carlson Department Store Sales data for September 1992 through August 1996
Certain conditions should be met by any good forecast. A good forecast should usually be based on adequate knowledge of the relevant past. With our company – The Carlson Department Store – we have the sales data for the 48 months preceding the storm available. This amount of historical data fulfills the requirement for the volume of relevant data. Table 1 shows the sales data for the Carlson Department Store for the months of
Lost Sales Forecast
Table of Contents
Introduction 3
Carlson Department Store Sales data for September 1992 through August 1996 4
Countywide Department Stores Sales data for September 1992 through August 1996 5
Choosing the appropriate forecasting method 6
Trend and Seasonal Components in Forecasting 7
An estimate of lost sales for the Carlson Department Store 10
Conclusion 10
Introduction
The Carlson Department Store suffered heavy damage when a hurricane struck on August 31, 1996. The store was closed for four months (September 1996 through December 1996) causing our sales drop to $0. The task of this report is to analyze sales in our department store in past 48 months and develop estimates of the lost sales at the Carlson Department Store for the months of September through December 1996. The Carlson Department Store is involved in a dispute with insurance company concerning the amount of lost sales during the time the store was closed. Two key issues must be resolved: 1) The amount of sales Carlson would have made if the hurricane had not struck, and 2) Whether Carlson is entitled to any compensation for excess sales from 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.
Carlson Department Store Sales data for September 1992 through August 1996
Certain conditions should be met by any good forecast. A good forecast should usually be based on adequate knowledge of the relevant past. With our company – The Carlson Department Store – we have the sales data for the 48 months preceding the storm available. This amount of historical data fulfills the requirement for the volume of relevant data. Table 1 shows the sales data for the Carlson Department Store for the months of