Liquor shops auction price prediction

Abstract

Liquor shops are one of the major sources of revenue for most state governments. The collection of this revenue is the responsibility of the state excise department which also decides the method of revenue collection. Broadly, there are two major methods, upfront collection of revenue through the shop auction process or a continuous collection method where the shops are charged a certain percentage on their sales apart from the shop license fee. Either way, currently the excise departments decide on the auction or license fee based on the state government's budget and the expected sales from a liquor shop. As one would expect, accurately predicting the sales is a complex task and more importantly, in the continuous revenue collection method, the liquor shops are incentivized to under report their sales in order to lower the amount to be paid to the excise department of their state. Hence, the major area of study for this project will be to understand the demographic variables that affect the liquor sales in a particular area. Apart from this, based on the results ofthis study, any shop that is an outlier by not achieving the expected sales will be identified.