# Harmon Foods Essay

544 Words3 Pages
Harmon Foods Case 1) Case Shipments = -80,315.68 + 946.56T + 3877.95S + .096C + .076D - .048CL - .02DL-2 Where T - Time in months since Dec 1983 S - Seasonal Index as given by the case C - Consumer Pack spending for the current month (packs*\$.2 discount *24 packages/case) D - Dealer Allowance for the current month CL- Consumer Pack spending lagged from 1 month ago (packs*\$.2 discount *24 packages/case) DL-2- Dealer Allowance lagged from 2 months ago We assume that one consumer pack includes 24 coupons (a case) at a value of \$.20/ea. Based on information in the case, we weighted the consumer packs and dealer allowance to be equal to 90% of the current month and 5% from each of the two previous months. Also, we assumed that these allowances would immediately increase sales and then decrease future sales because consumers and dealers would stock up during canvassing periods. Therefore, we included values for lagged effects of previous consumer packs and dealer allowances. 2) Case Shipments = -80,315.68 + 996.56*49 + 3877.95*113 + .096*960,000 + .076*154,455 - .048*345,028.8 - .02*368,337.5 = 483,432 Standard Error = 34,733.12 given by Excel Confidence Interval of 95% -> T Value of 97.5% for 42 degrees of freedom is 2.018 2.018 * 34,733.12 * SQRT (1 + (1/48)) = 70,818 95% Confidence Interval = Estimate +/- Standard Error*T-Value*SQRT(1+(1/n)) The 95% Confidence Interval is from 412,614 and 554,250 cases. 3) \$1 invested into the Dealer Allowance would increase current sales by .076 cases and decrease sales in two months by .02 cases, resulting in a net increase of .056 cases. Assuming that Harmon Foods is able to sell their cereal for \$2/pack, the value of a case is \$48 (\$2 * 24 packs/case). Therefore, \$1 invested in Dealer Allowance equates to \$2.69 in added sales revenue (assuming all other