You are a financial analyst at EncoreAuto®, a used car dealership, established in January of 2015. Based on its success over the past five years, the company is now planning a national expansion in the third quarter of 2020.
statistics
Description
You are a financial analyst at EncoreAuto®, a used car dealership, established in January of 2015. Based on its success over the past five years, the company is now planning a national expansion in the third quarter of 2020. To facilitate this expansion, EncoreAuto® plans to maximize sales during the month of June, as the company wants to minimize the need for external financing options.
Coming out of the aims for June 2020 and Q3 of that same year, the analysts at EncoreAuto®
are tasked with predicting the net income for June, as the basis for the expansion plans.
EncoreAuto® begins the process by conducting a survey of 100 potential customers, to
determine the price the customers are willing to pay for a used car. A copy of the survey
form is shown below, and the results of the survey are contained in the attached Microsoft
Excel file.
The survey yielded some interesting results, which EncoreAuto® now must factor into their
decision-making process.
1. The company has about 80% certainty that the price a customer is willing to pay for a
used car is determined by one, or a combination of all, of the factors identified in the
survey. Analysis is run to test this hypothesis.
2. The analysts next identify the base mean price the customers are willing to pay and
compare it with the values of mean price without influence of variable factors,
determined from all significant mathematical models derived.
3. The median of these mean values is used to complete the payoff table below. The table
represents the potential payoff if 35, 45, 55, or 65 customers come to EncoreAuto® in
June 2020. The Median of Means Model assumes that every customer who comes to
the dealership purchases a used car.
