A boutique cosmetics manufacturer is considering reducing the assortment in one of its product families to decrease complexity in its operations. The following table shows the mean and standard deviation of weekly demand for each of the ten different products comprising this product family.

Suppose that the company intends to remove products H, I, and J from its portfolio. To answer the following questions, assume that for all products the unit wholesale price is \($50,\) the standard cost per product unit is \($22\) (assume all variable), and annual inventory holding cost is 20 percent.

a. If inventory orders for each product are placed weekly, and it takes two weeks for each order to be fulfilled (i.e., a periodic review inventory system), what will be the impact of removing these products on the firm’s three financial statements? Please show your calculations.

b. Which ratios will most likely be affected and how? Please explain briefly.

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Product Mean weekly demand Standard deviation A 26,348 5,006 B 22,692 4,992 C 18,941 4,356 D 5,320 1,543 EFGHIT 4,702 1,458 3,116 1,091 2,250 855 1,004 412 865 424 J 762 404