Excel Online Structured Activity: Vanlandingham Robotics $-$ Purchasing Management

Emogene Edgerton is Chief Executive Officer of Vanlandingham Robotics. The robotics industry is a rapidly growing market with estimates of it moving from

$$26$ billion in $2020$ to $$74$ billion by $2026.$ However, the competition is fierce. In the healthcare sector alone, there are over $200$ companies involved in

robotics manufacturing.

Vanlandingham Robotics is a relatively new and small company. Despite that fact, Vanlandingham Robotics has a Jot going for it$.$ Jodie Johansson is the

Chief Engineer. Jodie is considered the best in the industry. Another valuable employee is Alfonso Abdalla, Chief Financial Officer. Alfonso is data driven and

an expense management savant. He understands that with such high$-$quality competition, in order to make the profit margins Emogene desires then,

revenue isn't enough. Low expenses are a must!

The key to success in managing expenses is to focus on Supply Chain Management; specifically, the area of purchasing management. The formula is

simple, reduce purchase spend and profits will increase $($assuming all else remains constant$).$ How can Vanlandingham Robotics do this? They must

increase their profits through smarter purchasing.

Alfonso decides he must talk with Aaron Lykes, Director of Supply Chain Management, about the actions required to ensure low expenses. As they

discussed the matter Aaron said he would desith a scorecard with the critical metrics so they can track the results. They agreed on the following metrics:

Return on Assets $($ROA$),$ Monthly Inventory Turnover Ratio, and Annual Inventory Turnover Ratio. In addition, Aaron was going to assign Dori Lenser,

Purchasing Manager, to complete a make$-$or$-$buy break$-$even analysis on some of their expensive supply items. Possibly, they will discover additional

opportunities to reduce their purchase spend.

Accounting Information for Ending Inventory and Cost of Goods Sold:

Vanlandingham Robotics has an ending inventory of $$290,000$ as of December $31,2019$ and the following accounting information:

The last action in their cost reducing initiative was for Dori to complete a make$-$or$-$by break$-$even analysis. Dori obtained the following costs for making and

buying of a key component for their robots.

The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions

below. Do not round intermediate calculations.

Open spreadsheet

Questions

Compute the monthly inventory turnover ratio for each of the twelve months. Round your answers to two decimal places.

What is the annual cost of goods sold? Round your answer to the nearest dollar.

$

What is the average inventory for the year? Round your answer to the nearest cent.

$

Compute the annual inventory turnover ratio. Round your answer to two decimal places.

What is the break$-$even point? Round your answer to the nearest whole number.

units

Which option is less expensive, making or buying? Round your answers to the nearest dollar.

The

option is less expensive because the total cost for the make option that is $

option that is $

is

than the total cost for the buy