Big 10 Sweater Case Study

907 Words Oct 5th, 2015 4 Pages
Inventory Management at Big10Sweaters.com case study

1. Unit Unit Sales Sale Price Cost Revenue Cost Margin
Ohio 2,300 $120 73.88 $276,000 $169,924 $106,076
Michigan 1,468 $120 73.88 $176,160 $108,456 $67,704
Purdue 890 $120 73.88 $106,800 $65,753 $41,047 eBay 342 $50 60.88 $17,100 $20,821 ($3,721)
Totals 5,000 $576,060 $364,954 $211,106 Overhead: $120,000 Net Profit: $91,106

After paying 25% to the venture capital firm, $22,776.50, the net profit before taxes would be $68,329.50. Then after paying taxes of $34,164.75 they would be left with $34,165 of an increase in cash.

2. Aggregate demand forecasting is used by the company because the business is centered around the custom printing of the
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Based on the forecast data Ohio State gets 33.78% or 2,627 units, Michigan get 23.87% or 1,856 units, Purdue get 13.51% or 1,051 units, Michigan State gets 21.85% or 1,699 units, and Indiana gets 6.98% or 543 units.
If we base this on the individual forecasts we would order the following:
Ohio State = NORMSINV(.809123,2500,300) = 2,762
Michigan = NORMSINV(.809123,1767,252) = 1,987
Purdue = NORMSINV(.809123,1000,100) = 1,087
Michigan State = NORMSINV(.809123,1617,126) = 1,727
Indiana = NORMSINV(.809123,517,76) = 583

Total order size would be 8,146. There is a difference of 8,146 - 7,767 = 379 sweaters.

4. Unit Unit Sales Sale Price Cost Revenue Cost Margin
Ohio 2,500 $120 73.88 $300,000 $184,700 $115,300
Michigan 1,767 $120 73.88 $212,040 $130,546 $81,494
Purdue 1000 $120 73.88 $120,000 $73,880 $46,120
Michigan State 1617 $120 73.88 $194,040 $119,464 $74,576
Indiana 517 $120 73.88 $62,040 $38,196 $23,844 eBay 366 $50 60.88 $18,300 $22,282 ($3,982)
Totals 7,767 $906,420 $569,068 $337,352 Overhead: $161,000 Net Profit: $176,352

If the same principles are applied in regards to venture capital and taxes we see that the venture capital people would get $44,088 leaving $132,264 before taxes. Taxes would come to $66,132 leaving an increase in cash of $66,132.

5. At current the company only advertises in programs distributed at

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