The Carlson Department Store suffered heavy damage when a hurricane struck on August 31, 2003. The store was closed for four months (September 2003 through December 2003), and Carlson is now involved in a dispute with its insurance company concerning 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 from increased business activity after the storm. More than $8 billion in federal disaster relief and insurance money came into the county, resulting in increased sales at department stores and numerous other businesses.
Table (a) shows the sales data for the 48 months preceding the storm. Table (b) reports total sales for the 48 months preceding the storm for all department stores in the county, as well as the total sales in the county for the four months the Carlson Department
TABLE (a) SALES FOR CARLSON DEPARTMENT STORE, SEPTEMBER 1999
THROUGH AUGUST 2003
TABLE (b) DEPARTMENT STORE SALES FOR THE COUNTY, SEPTEMBER 1999 THROUGH DECEMBER 2003
Managerial Report
Prepare a report for the management of the Carlson Department store that summarizes your findings, forecasts, and recommendations. Include the following:
1. An estimate of sales had there been no hurricane
2. An estimate of countywide department store sales had there been no hurricane
3. An estimate of lost sales for the Carlson Department Store for September through December2003