New car sales for a dealer in Cook County, Illinois, for the past year are shown

Question

New car sales for a dealer in Cook County, Illinois, for the past year are shown in the following table, along with monthly indexes (seasonal relatives), which are supplied to the dealer by the regional distributor Month Units Sold Index Month Units Sold 0.70 0.80 0.60 0.94 0.89 1.00 Index 0.90 1.10 1.20 1.20 1.20 1.25 622 643 624 Jan Feb Mar Apr. 721 May 805 Jun Jul Aug Sept. Oct. Nov Dec 756 811 838 823 832 807 736 b. Deseasonalize car sales. (Round your answers to the nearest whole number.) Month Jan Feb Mar Deseasonalized Month Jul Aug Sep Oct. Nov Dec. Deseasonalized May Jun e. What action might management consider based on your findings in part b? Advertising and sales promotions because the deasonalized data displays a downward trend O Increase inventory because the deasonalized data displays an upward trend

Explanation / Answer

Solution:

(b) Deseasonalized car sales for the given data is calculated as,

Deseasonalized car sales = Units sold / Index

For the months from Jan. to Dec., deseasonalized car sales for each month is summarized below.

(All the values are rounded off to the nearest whole number)

Jan. = 622 / 0.70 = 889

Feb. = 643 / 0.80 = 804

Mar. = 624 / 0.60 = 1040

Apr. = 721 / 0.94 = 767

May = 736 / 0.89 = 827

Jun. = 805 / 1.00 = 805

Jul. = 756 / 0.90 = 840

Aug. = 811 / 1.10 = 737

Sep. = 838 / 1.20 = 698

Oct. = 823 / 1.20 = 686

Nov. = 832 / 1.20 = 693

Dec. = 807 / 1.25 = 646

(e) From the findings made in part b, we can observe that there is a downward trend in the deseasonalized car sales, from the month of January (889 units) to December (646 units). Therefore, the management should consider:

Advertising and sales promotions because the deseasonalized data displays a downward trend.

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