# 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
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