Supply Chain Question
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Assignment 1: Supply chain Design
Question 1
The following data are pulled from a recent Walsh Manufacturing annual report.
Assets
Raw material inventory
Work-in-process inventory
Finished goods inventory
Property, plant & equipment
Other assets
Total assets
$120,000
$50,000
$300,000
$500,000
$200,000
$1,170,000
Condensed Income Statement
Revenue
Cost of goods sold
Other expenses
Net income
$2,000,000
$600,000
$1,000,000
$400,000
Calculate:
(a) Inventory turnover, and
(b) Weeks of supply.
Question 2
Zyad Furniture, Inc., spends 60% of its sales dollars in the supply chain and has a current
gross profit of $10,000. Zyad wishes to increase gross profit by $5,000 (50%).
He would like to compare two strategies: reducing material costs (scenario 1) vs. increasing
sales (scenario 2).
Question 3
Donegal Footwear is an international supplier of outdoor footwear for adventurous families.
Currently, the company uses a logistical provider to provide warehouse services and handle
packages destined for ground delivery. The contract calls for $9 million in annual fixed charges,
which covers the provideràoverhead and warehouse costs, and variable costs of $15 per
package shipped. Recently, Donegal Footwear found a warehouse it could lease at a cost of
$16 million per year, which includes lease costs, labor, and management oversight.
Furthermore, the company found another provider who would deliver packages from the
warehouse for $6.00 per package.
Considering only costs, how many packages must Donegal Footwear ship to make the vertical
integration into warehouse operations beneficial?
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