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?