In: History

Eastern Motors Auto Dealership wanted to estimate the average CLV over a 5 year time horizon of a customer who purchases a new vehicle. The average vehicle sells for $25,800 and has a margin of 10%. Based on historical averages, 74% of people buying a new vehicle at Eastern will return for service 12 times over the next 5 years. Though it varies considerably, Eastern generates approximately $142 in margin on each service visit after accounting for parts and direct labor costs.

1. Not including service, what is the average dollar margin for each new vehicle sold?

2. What is the 5 year value of the service component of a customer who returns to Eastern Motors for servicing their vehicle?

3. What is the estimated 5 year value of the service component of a customer who purchases a new vehicle at Eastern Motors?

4. What is the total estimated CLV over a 5 year time horizon for someone who purchases a new vehicle at Eastern Motors?

5. What would be the value of a service loyalty program that increased the average number of visits by 2 (over 5 years) and increased the probability that a new vehicle purchaser would return for service by 5 percentage points (e.g. from 75% to 80%) on a per customer basis?

I have the answers. I would just like the work to be shown in order to fully understand it. Thank you so much.

Eastern motor auto dealership wanted to estimate the average CLV over a 5 year time Horizon of a customer who purchases a new vehicle the average vehicle sales for $ 25800 and has a margin of 10%.

Average selling price of a car = $ 25800

Customer get margin on each vehicle sold = 10%

1) so the dollar margin in each car = $ 25800*10/100 = $2580.

The gross profit ratio has been associated with the selling price of the product so the service margin is not a calculated.

2) margin on each service visits = $142.

Number of times service over next 5 year = 12 time.

So the 5 year value of a service component of a customer

= 12 times of a margin on each service visit

= 12 * $142 = $1704.

3) for 74% the 5 year value of a service component of a customer who returned Eastern motor for a service their vehicle is $1704.

So the value of service component who purchase a new vehicle = value of a service component * probability that a customer will purchase a new vehicle

= $1704 * 0.74 = $ 1260.96.

4)For 74% of 5 year value of a service component of a customer = $1704.

The dollar margin in each car = $2580.

So the average CLV = 1704+0.74 * 2598 + 0.26 * 0

= $3626.52

BrookeBrooke
Motors is a small car dealership. On average, it sells a car
for
$ 27 comma 000$27,000,
which it purchases from the manufacturer for
$ 23 comma 000.$23,000.
Each month,
BrookeBrooke
Motors pays
$ 48 comma 200$48,200
in rent and utilities and
$ 68 comma 000$68,000
for salespeople's salaries. In addition to their salaries,
salespeople are paid a commission of
$ 600$600
for each car they sell.
BrookeBrooke
Motors also spends
$ 13 comma 000$13,000
each month for local...

Sanborn Motors is a small car dealership. On average, it sells a
car for $29,000, which it purchases from the manufacturer for
$25,000. Each month, Sanborn Motors pays $59,800 in rent and
utilities and $72,000 for salespeople's salaries. In addition to
their salaries, salespeople are paid a commission of $800 for each
car they sell. Sanborn Motors also spends $9,000 each month for
local advertisements. Its tax rate is 40%.
Requirement 1
How many cars must Sanborn Motors sell each...

Below are three possible investments that follow a 5-year time
horizon:
1. Invest in a basic human resource information system:
Cost: $300K
Cash Flows: $150K each year for 5 years
2. Invest in a high-end human resource information system:
Cost: $1 Million
Cash Flows: $500K each year for 5 years
3. Invest in a talent acquisition function
Cost: $500K
Cash Flows: $250 K each year for 5 years.
Assume that you will pay for one of these projects by
withdrawing...

It is the question from ECON 262
Over the past 5 years, the average time to resolve customer
complaints at a large local retailer has been 3.25 days. Management
feels the mean time is too long, which probably results in
decreased competitiveness. The retailer has recently instituted a
new complaint processing procedure and has tested the procedure on
20 customer complaints. The results of the tests are shown below.
The values given are the number of days required to process...

A pharmacist has recently started a new private pharmacy and
wanted to estimate the average waiting time to get prescribed
medication in his pharmacy. He randomly selected 40 patients for
observation and recorded how many minutes each waits. The mean
waiting time was 28 minutes. Assuming that the waiting time follow
a normal distribution with the standard deviation of 4 minutes,
estimate the mean waiting time among all patients using a 95%
confidence interval. Interpret this interval.

Suppose that an investor with a 5 year investment horizon is
considering purchasing a 7 year, 9% coupon bond selling at par. The
investor expects that he can reinvest the coupon at an annual
interest rate of 9.4% and that at the end of the investment horizon
5 year bond will be selling to offer a yield to maturity of 11.2%.
What is the total return for this bond?

Given a certain forecast, aggregate planning is to determine
operational parameters over a specified time horizon, such as
production rate, workforce size, machine capacity
level, inventory, etc.
a) The fundamental trade-offs in aggregate planning are among
capacity (regular time, overtime, subcontracted), inventory and
backlog/lost sales because of delay. Briefly explain the three
strategies that are most widely used in aggregate planning.
[6]
b) A gardening tool company aims to establish an aggregate plan to
minimise its operation cost in the...

During its first year of operations, Tron Auto Dealership (TAD)
bought vehicles from a manufacturer on account at a cost of
$620,000. TAD returned $164,000 of these vehicles to the
manufacturer for credit on its account. TAD then sold $392,000 of
the remaining vehicles at a selling price of $697,000. TAD’s
customers rarely return vehicles, so TAD records sales returns only
as they occur. One customer did return a vehicle to TAD, which had
been sold to the customer for...

A travel magazine wanted to estimate the mean amount of leisure
time per week enjoyed by adults. The research department at the
magazine took a sample of 36 adults and obtained the following data
on the weekly leisure time (in hours):
15 12 18 23 11 21 16 13 9 19 26
14 7 18 11 15 23 26
10 8 17 21 12 7 19 21 11 13
21 16 14 9 15 12 10 14
a. What is...

A car dealership claims that its average service time is less
than 7 hours on weekdays. A random sample of 16 service times was
recorded and yielded the statistics x ̅=6.75 hours and s= 1.62
hours. Assume service times are normally distributed, is there
enough evidence to support the dealership’s claim at 5%
significance level? 10 marks (Please show every step for
full marks)
Hypotheses:
Rejection Region:
Test Statistic:
Decision/Conclusion:

ADVERTISEMENT

ADVERTISEMENT

Latest Questions

- Two cylindrical iron rods both at temperatureThave lengthsLand 2L, and radiiRandR/2, respectively. If the rods’ temperatures...
- discussed big data , data warehouse and google database for big data and bootstrapping technique for...
- Why do multinational corporations use tax avoidance strategies even when it might be immoral? Explain at...
- An organization has the following password policies: - password must be at least 16 characters long...
- 1) The three-dimensional structure of a protein is determined by its primary, secondary, or tertiarty structures....
- Which of the psychotherapies discussed in the textbook do you think is most effective? Why? Discuss...
- A genetic experiment involving peas yielded one sample of offspring consisting of 416 green peas and...

ADVERTISEMENT