Question: How would Amazon use financial evaluation techniques to decide whether or not to engage in this project: inventory reduction through improved demand forecasting usingpredictive analytics

How would Amazon use financial evaluation techniques to decide whether or not to engage in this project: inventory reduction through improved demand forecasting usingpredictive analytics and machine learning algorithms.

  • How will the project be funded? Capital or revenue?
  • What are the required project resources and which are capital and which are revenue costs?
  • How are costs classified and allocated - direct costs, indirect costs, fixed costs, variable costs? Which cost best suits the project and why.
  • Using the above information, what financial concept and evaluation can be used to agree to engage in this project and why. Consider one: return on investment, payback period, or internal rate of return. How can this be used to undertake an investment appraisal?
  • What is a consideration of any savings which the project might generate and how would the savings be calculated?

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Project Funding The project can be funded through either capital or revenue If funded through capital it means that Amazon would allocate a portion of its investment budget to cover the expenses relat... View full answer

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