Hightower Department Stores Harvard Case Solution & Analysis

Introduction

            High tower Department Stores was a leading company in the metropolitan area of United States. 16 full line department stores are being operated in 6 different metropolitan locations by Hightower Department Stores. The company considered itself as the fashion leader in the industry. This was because the company had the ability to predict the changes that were required by the customers of the company and the company adapted those changes within a short period of time.

            The success of the chain was dependent on a range of factors such as friendly and knowledgeable sales personnel, advertising on TV, style and fashion and point of sale presentations and newspaper advertisements. The sales reported by the company for the fiscal year 1992 had been $ 371 million and the net income reported by the management had been $ 17.5 million. The company expected small increased in the sales and the profits of the company for the year 1993.

            Julia Brown, the toy buyer for Hightower Department Stores had been working over the most challenging task of the organization. Buying toys around the world and selling them at a profit has always been a challenge for the company. Most of the sales, almost, 50% of the total, occurred in the months of Christmas that are November and December. The peak season for this year was to come in the end, however, standing at the start of the year 1993, many important decision had to be made by Julia Brown.

Decision problem

            The main issue that is being faced by Julia Brown is to decide which of the three imported toys, namely the raccoon, pig and bear should be offered to the customers for sales in the 16 department stores of Hightower Department Stores. The Christmas season was approaching and the decision had to be made by Julia Brown.

            Julia Brown had an experience of 15 years with Hightower Department Stores and she had been involved in foreign trips for about 10 years for the purchase of stuffed toys for her company’s department stores. The final decision now has to be made by her, the test data for about 20 stuffed toys have been provided and now she needs to predict the future sales for each of the toys based on the test data.

             The concept of least squares and linear regression will have to be used in order to predict the sales for the coming year and make a final decision regarding the final toy to purchase from Germany. The sales potential of each of the stuffed animals is the main focus of this case and then the number of the units of the recommended stuffed toy will have to be found for which the order would be placed by Julia Brown.

Decision Alternatives & Evaluation

             The linear regression analysis is the model which has been used to arrive at the final decision for the problem stated above. The linear regression model is a simple model which is used for the purpose of prediction based on certain dependent and independent variables.

Hightower Department Stores Case Solution

            The linear regression is the statistical test that has been applied in order to predict the sales for the year 1993 for bear and raccoon based on the historical test sales units for each of the stuffed toy items. The test sales data for the 20 stuffed toys has been provided in the exhibits. Two of these stuffed toys have been neglected for determining the prediction model. These two stuffed toys are rabbit and skunk.

            This is because both of these stuffed toys have performed very poorly in the past, therefore, Julia Brown had decided to not include these toys for the prediction of the year 1993. Similar is the case with the pig. There has been no data provided in the exhibit regarding the test sales units or the historical total sales units for the pig. This was because this toy had performed very poorly last year and this was considered as a real dog. Julia Brown, knew that considering this stuffed toy last year was a big mistake on her part which she did not intended to repeat this year.

Regression Analysis

             Therefore, the data for the skunk and the rabbit has been excluded from the exhibit 5 and the regression analysis has been performed on the other stuffed toys as provided in the exhibit. However, before the linear regression test is applied there are certain assumptions for this test which should be kept in mind.............

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