Automobile dealers -- United States -- Economic aspects, Automobile dealers -- Inventory -- Management, Operations research, Automobile dealers -- Profit -- Mathematical models
Car dealerships are the retail outlets for the auto manufacturers. They make profit from various centers within the dealership, including new car sales, used car sales, part and service. In this paper, we will focus on maximizing the profit by selling used cars. For instance, they may purchase vehicles from an auction based upon which makes and models they believe they can sell given the public demand at the time.
Dealers purchase or take in trades of all types of makes and models. Some models are on the lot longer and end up costing more money which in turn the car loses value. In some cases the dealer may sell them through third party auctions. The key is to keep enough of the models on the lot that will sell fairly quickly, without taking in too much inventory that does not have a great rate of return.
In this paper, we try to solve the problem of managing the used cars inventory by finding out what the best mix of used cars are that the dealership can order to maximize its profit. On the other hand, we also consider the number of days the cars might stay on the lot because of the depreciation factor and its effect on the total profit. The result of this project should help the dealership make the right decision and plan for their used car inventory to maximize profits.
Al-Hadi, Mohammed; Beebeheiser, Kyndra; Eljayar, Ali; Gryaznov, Dmitry; and Harris, Tasha, "Car Dealership Profitability Maximization" (2017). Engineering and Technology Management Student Projects. 1173.