Devry GSCM520 Week 6 assignment

Inventory Management at Big10 Sweater

Review the Inventory Management at Big10 Sweater case study on page 395 in the textbook and refer to the questions noted in Doc Sharing.

Grainger: Reengineering the China/U.S. Supply Chain

Review the Grainger: Reengineering the China/U.S. Supply Chaincase study on page 455 in the textbook and refer to the questions noted in Doc Sharing.

Compose an APA-formatted Word document, no more than three pages in length; please answer each of the questions from the presented case study of your choice.

ANALYTICS EXERCISE: Inventory Management at Big10Sweaters.com

1. You are curious as to how much Rhonda and Steve made in their business last year. You do not have all the data, but you know that most of their expenses relate to buying the sweaters and having them monogrammed. You know they paid themselves $50,000 each and you know the rent, utilities, insurance, and a benefit package for the business was about $20,000. About how much do you think they made “before taxes” last year? If they must make their payment to the venture capital firm, and then pay 50% in taxes, what was their increase in cash last year?

Last Year’s Pre-Tax Profit

Unit Unit

Sales Sale Price Cost Revenue Cost Margin

Ohio

Michigan

Purdue

eBay

Totals

Overhead:

Net Profit:

2. What was your reasoning behind using the aggregate demand forecast when determining the size of your order rather than the individual school forecasts? Should you rethink this or is there a sound basis for doing it this way?

3. How many sweaters should you order next year? Break down your order by individual school. Document your calculations in your spreadsheet. Calculate this based on the aggregate forecast and also the forecast by individual school.

The critical probability then is Cu/(Co+Cu) =

If we base this on the individual forecasts we would order the following:

Ohio State =

Michigan =

Purdue =

Michigan State =

Indiana =

Total order size would be ?

4. What do you think they could make this year? They are paying you $40,000 and you expect your benefit package addition would be about $1,000 per year. Assume that they order based on the aggregate forecast.

We base this on the expected average sales from our forecast and an aggregate order size of 7,767 sweaters. Assuming sales are as forecast, the safety stock would be sold on eBay. We also need to adjust overhead to account for the $41,000 increase due to the new employee.

This Year’s Expected Pre-Tax Profit

Unit Unit

Sales Sale Price Cost Revenue Cost Margin

Ohio

Michigan

Purdue1000

Michigan State

Indiana

eBay

Totals

Overhead:

Net Profit:

5. How should the business be developed in the future? Be specific and consider changes related to your supplier, the monogramming subcontractor, target customers, and products.