Macroeconomic variables

Two more questions from the previous scenario at the bottom of word document.

Big Drive Auto is a multistate dealer of several manufacturers' cars and trucks. They sell the vehicles, service them, sell parts for repair, and do a significant business in motor oil, coolant, and replacement tires. Management is always scanning the macroeconomic environment for signals that will help them better plan their business. Big Drive has been keeping data on the volume of sales in its various lines of business over the last ten years. In some cases, like auto and truck sales, it tracks the numbers of units sold. In other cases, it uses constant dollar sales. The following tables report Big Drive's sales in all of its multistate locations since 1998.

Table 1.

Vehicle Unit Sales (thousands)
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
139 160 145 133 154 167 165 161 160 163

Table 2.

Motor Oil, Coolant, Tires (thousands of constant dollars)
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
2,096 2,064 2,150 1,978 1,935 1,980 1,956 2,000 2,020 2,050

Table 3.

Service Revenue (thousands of constant dollars)
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
5,915 6,111 6,300 6,490 6,716 6,897 7,118 7,317 7,500 7,650

In addition to sales data, Big Drive Auto collects data on the prices it charges customers. Following are the data since 1998:

Table 4.

Index of Sales Prices for Vehicles: Year 2000=100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
98.0 99.2 100 99.0 97.0 96.8 98.0 97.2 98.5 99.0

Table 5.

Index of Sales Prices for Motor Oil, Coolant, Tires: Year 2000=100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
100.5 100 100.1 102.0 102.9 106.0 111.2 116.9 118.5 119.0

Table 6.

Index of Sales Prices for Auto and Truck Services: Year 2000=100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
97.5 98.8 100 100.4 102.0 104.1 105.8 107.7 109.2 110.4

The source for the U.S. government macroeconomic data that correspond to company data can be found in the industry detail of the GDP accounts as reported by the Bureau of Economic Analysis. They give data for both GDP quantity indexes by industry, as well as the price indexes by industry used to convert the nominal data into the quantity data. Industry detail tables with data going back to 1998 can be found at http://www.bea.gov/Industry/Index.htm. Click on the link for Interactive Tables of the Gross Domestic Product by Industry. The tables can be found in the Gross Output by Industry section. The Bureau of Economic Analysis Web page may change locations periodically. If this is the case, you will be able to locate the information using a search engine (such as Google) and the phrase, GDP by Industry.

QUESTIONS

1. Explain how specific planning and operating decisions at the organization can be improved using the macroeconomic data.
2. How would you get reliable forecasts of these macroeconomic variables?