Below is the time series graph of total sales of SAM's supermarket for an eight year period. It is the contention of SAM's owners that a mishap caused by one of their suppliers in 1973 was responsible for the dramatic drop-off in sales in that year. More importantly, the market is suing its supplier for the value of lost sales which they interpret as the gap between the actual sales and the sales that could have been expected if there were no change in the trend due to the mishap. The situation is described in the graph below.
How do we approach this question? The benchmark in their case was a projection based on a simple extrapolation of the previous trend. But is this an appropriate benchmark ? In the two graphs below, the pattern of State sales has been used as a benchmark. In the first, the indexes of SAM's sales and supermarket sales in RI are plotted because SAM's sales are in millions and the state sales are in hundred of millions. It seems clear from the graph that SAM's sales decline is in line with the declines in the State, which raises questions regarding the extent to which the mishap was responsible for the sales decline. It looks very much like Sam shared in the difficult times experienced by many others.
A somewhat different view of the situation, but one that brings us to the same conclusion, is the graph of the ratio of SAM's sales to the State's. This measure of relative sales also fails to show the deteriorating position of SAM's. In fact, we see that SAM's share of State sales increased after the mishap as SAM's sales fell less than sales in the State. In fact, when reviewing the two graphs it looks as though SAM's was able to weather the recession of 1982 better than the rest of the supermarkets in the State.
