Question

The Carlson Department store suffered heavy damage when a hurricane struck on August 31. The store was closed for four months (September through December), and Carlson is now involved in a dispute with its insurance company about 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 due to increased business activity after the storm. More than $8 Billion in federal disaster relief and insurance money came into the country, resulting in increased sales at department stores and numerous other businesses.

Table 6.18 gives Carlson's sales data for the the 48 month preceding the storm. Table 6.19 reports total sales for the 48 months preceding the storms for all department stores in the country , as well as total sales in the country for the four months the Carlson's Department Store was closed.

Table 6.18 Sales for Carlson Department store ($Million)

Months	Year1	Year 2	Year 3	Year 4	Year 5
January		1.45	2.31	2.31	2.56
February		1.80	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		2.20	2.14	2.42	2.37
July		2.13	2.27	2.40	2.31
August		2.43	2.21	2.50	2.23
September	1.71	1.90	1.89	2.09
October	1.90	2.13	2.29	2.54
November	2.74	2.56	2.83	2.97
December	4.20	4.16	4.04	4.35

Table 6.19 Department Store Sales for the County ($Million)

Month	Year 1	Year 2	Year 3	Year 4	Year5
January		46.80	46.80	43.80	48.00
February		48.00	48.60	45.60	51.60
March		60.00	59.40	57.60	57.60
April		57.60	58.20	53.40	58.20
May		61.80	60.60	56.40	60.00
June		58.20	55.20	52.80	57
July		56.40	51.00	54.00	57.60
August		63.00	58.00	60.60	61.80
September	55.80	57.60	49.80	47.40	69.00
October	56.40	53.40	54.60	54.60	75.00
November	71.40	71.40	65.40	67.80	85.20
December	117.60	114.00	102.00	100.20	121.80

Carlson's Manager asked you to analyze these data and Estimates of the lost sales at the Carlson Department Store for the month of September through December. They also asked you to determine whether a case can be made, Carlson is entitled to compensation for excess sales it would have earned in addition to ordinary sales

Managerial Report
Prepare a report for the managers of the Carlson Department Store that summarizes your findings, forecast and recommendations. Include the following:
1. An estimates of sales for Carlson Department Store had there been no hurricanes
2. An estimates of country wide department stores sales had there been no hurricanes
3. An estimates of lost sales for the Carlson Department Store for September through December.

In addition use the countrywide actual department stores sales for September through December and estimates in part (2) to make a case for or against excess storm-related sales

Answer 1