Problem: In October of every year, Walmart's national sales director knows the calls are coming for his holiday forecasts. This year, the firm's holiday performance is especially important, after disappointing sales to date.
While the director has no problem expressing his hope for strong holiday sales, investors and reporters as well as local managers are seeking a prediction that has evidence to back it. Consequently, he turns to his analytics department, which has been collecting wide swaths of data for Walmart over many years across the 381 metropolitan statistical areas (MSAs) in the United States. Some variables of particular interest include holiday sales, average prices, and consumer confidence. Using these data, the analysts arrive at the following equation, designed to predict Holiday Sales (measured as revenues):
In (Holiday Sales) = 25.8 - 0.8 (Price) + 0.9 (Consumer Confidence)
The director notes that most MSAs saw a decrease in consumer confidence of approximately 4 percent. Based on this information, does the evidence support optimism for holiday sales if prices remain unchanged? Could a change in price help to bolster revenues?
Explain your thoughts, supported by facts based on the information you learned throughout the term.
Your answers must be comprehensive in nature.
Conclude by separating the strategies you mentioned into the two separate categories of supply and demand. Then state which strategy would be the best, in your opinion, to reduce the impact of a shortage, and why.