ACC $3000-$ Data Analytics Case

Fall $2024$

Individual Data Analytics Project

Estimating Warranty Expense $/$ Predicting Product Returns

General:

You work for a sports gear company. You have been tasked with providing the CFO of your firm an analysis of product returns and warranty related expenses associated with the sales of your firm's products. Management needs to understand the trends in sales of the different products as well as provide an estimate for warranty expense for the ending period of the year and decide whether a return allowance is needed.

The company's business model is as follows: all products, EXCEPT for products sold during clearance sales, can be returned within $30$ days of purchase. All returns are booked in the following month. For example, if a customer purchased a ski jacket on February ${15}^{th},$ and returned it at any time within $30$ days, the return will be accounted for in March. The company provides a $60-$day warranty on its products. Any warranty that is exercised is booked in month $t+2$ after the sale. For example, if a customer purchased a tennis racket on February ${15}^{th},$ and exercised the warranty at any time within $60$ days, the warranty will be accounted for in April.

You requested that the firm's IT personnel provide you with historical information dating back ten years. The data contains information on the two products that comprise the majority of the