Speciality Toys.

1487 Words6 Pages
The Synopsis of the problem: Specialty Toys, a retailer of Children’s toys is planning to launch a new toy called “Weather Teddy”. Sales Managers at the stores are working relentlessly to forecast the most appropriate demand order quantity in such a way that profit could be maximized. The analysis of the problem calls for an ideal demand order quantity situation with lower probability of stock-out option. Following is the statistical information given: The cost of goods sold per unit = $ 16 The cost of Sales price Per Unit = $ 24 Surplus inventory sales price per unit = $ 5 Cost of excess inventory per unit = $ 16- $ 5 = $ 11 Expected Demand predicted by Sales Forecaster= 20,000 units Probability of demand between 10,000 units and…show more content…
The most likely case scenario of 20,000 unit sales | | | | Actual Sales Revenue ( In dollars) | 360000.00 | 432000.00 | 480000.00 | 480000.00 | Actual Cost of Sales | 240000.00 | 288000.00 | 320000.00 | 320000.00 | Profit Margin | 120000.00 | 144000.00 | 160000.00 | 160000.00 | Excess Inventory Cost | N/A | N/A | 44000.00 | 88000.00 | Net Profit (Profit-Loss From Clearance Sale) | 120000.00 | 144000.00 | 116000.00 | 72000.00 | | | | | | c. The best case scenario of 30,000 unit of sales ( In dollars) | | | | | Actual Sales Revenue | 360000.00 | 432000.00 | 576000.00 | 672000.00 | Actual Cost of Sales | 240000.00 | 288000.00 | 384000.00 | 448000.00 | Profit Margin | 120000.00 | 144000.00 | 192000.00 | 224000.00 | Loss from Clearance Sale | N/A | N/A | N/A | N/A | Net Profit (Profit- Loss from Clearance Sale) | 120000.00 | 144000.00 | 192000.00 | 224000.00 | Table 1: Project Profit
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