Floorplan at an automobile franchise: You can’t just drive on!

This critical incident discusses the complexities of automobile inventory management for a dealership. Specifically, Kate McConaughey has been the General Manager for American Auto Sales (AAS), a franchise located in North Carolina. She has the daunting task of forecasting inventory over 60 to 90 days while being asked to take on more vehicle inventory from the manufacturer. Floorplan, financed vehicles, have resulted in accrued interest. The manufacturer has reimbursed the dealership for interest expenses up to 60 days. Beyond 60 days, the dealership has had to absorb the costs, which hurts the bottom line. Students are asked to consider the details of the case to assist McConaughey with the development of relevant models such as floorplan, forecast of inventory, and an analysis projection of accrued interest expense.