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Study questions. Chapter 13 edition 10

Using a spreadsheet computer software program, construct a supply chain finance model and calculate the profit margin; ROA; inventory turns; and transportation, warehousing, and inventory costs as a percentage of revenue for the following:

Sales = $200,000,000

Transportation cost = $12,000,000

Warehousing cost = $3,000,000

Inventory carrying cost = 30%

Cost of goods sold = $90,000,000

Other operating costs = $50,000,000

Average inventory = $10,000,000

Accounts receivable = $30,000,000

Cash = $15,000,000

Net fixed assets = $90,000,000

Interest = $10,000,000

Taxes = 40% of (EBIT Interest)

Current liabilities = $65,000,000

Long-term liabilities = $35,000,000

Stockholders equity = $45,000,000

Using the supply chain finance model developed for Study Question 5, calculate the impact on profit margin; ROA; inventory turns; and transportation, warehousing, and inventory costs as a percentage of revenue for the following scenarios:

Transportation costs increase = 20%

Warehousing costs decrease = 5%

Average inventory decrease = 10%

Warehousing is outsourced with:

Net fixed assets reduced = 20%

Inventory reduced = 15%

Warehousing costs = $0

Transportation costs reduced = 5%

Outsourcing provider costs = $2,500,000