Question

Assignment questions
It is August 2008 and ECAR Automotive is one of four car dealerships located in rural Atlanta. The residents in the area replace their vehicles roughly every eight years. When they do replace their vehicles, they tend to visit the same dealership that sold them the first one, building a relationship with the dealership. This has kept sales relatively stable for all the dealerships in the area. Recently, however, customers have begun expanding their shopping options. ECAR Automotive believes this is due to the rise of the Internet.
Customers have begun coming to the dealership with an exact idea of what car they would like and have a price in mind. When ECAR Automotive does not have the model available or cannot meet the price, customers have started going to competitors.
This trend has the general manager of ECAR, Mike Leavy, worried. Mike runs the dealership like a small business and relies on repeat customers. ECAR is not a chain and has little access to outside capital, so cash flow is critical. If sales are low, Mike has to take out a loan to pay the manufacturer for the vehicles. If sales are high, ECAR loses potential customers due to lack of inventory. Mike has decided that he needs to be able to forecast this new variability to keep the business healthy.

Peter Goodson is the inventory manager at ECAR and has historically prepared the forecasts. Peter usually just takes the sales numbers from last year and adjusts them upward or downward based on his ‘‘gut feeling.’’ This has worked well in the past, but Mike has told him to look into other forecasting methods. Peter is preparing the September 2008 sales forecast for ECAR and is not sure where to start. For the August forecast, Peter used the sales numbers from August 2007. The August 2007 forecast was off by 10 cars and Peter hoped the 2008 version would fare better. Peter assumed the sales representatives would always work a little harder if sales were low and they could always take vacation time if they were above target. Mike has told Peter to look into the different forecasting models, but Peter is not sure of the difference. Mike also wants Peter to determine the amount of profit being lost due to poor forecasting. Peter has access to sales and forecast data from the past 18 months and has already calculated various measures of error in Excel.

Read the case following case and answer the following questions:

Q(1) Which forecasting approach ECAR Automotive currently using? Justify your answer
Q(2) Is this type of forecast appropriate or would an alternative method produce more accurate results? Why or why not?
Q(3) Which measure should Peter use to assess and reduce the forecast error rates? Why?
Q(4) If Peter’s forecasts are consistently too high or consistently too low, which measure is
most useful to remedy the situation? Justify your answer
Q(5) If the average sale price for one car is $30,000 and the average car costs $24,500 to acquire, how much profit is being lost each month as a result of poor forecasting?
Note: For ease of calculation, assume all cars arrive on the 1st and all cars remaining on the 31st are disposed of with a 50% markdown.
Q(6) What can Peter do to improve his forecasting based on your observations?

b489d83cf535c5e73d84ff9c8addf29a.docx

Answer 1

Answer:

ok but mark me as BRAINLIEST please

Answer 2

Answer:

please be a bit clear while questioning