Ava Beane, the newly hired Manager of Inventory Planning, would like your assistance in evaluating several alternative courses of actions to address the inventory challenges faced by Scientific Glass. Please answer the following questions to help her analyze her options.

1.Given the finance department's forecast of a 20% increase in sales, how much more will SG have to invest in inventory to deal with the increase if nothing changes in its inventory management policies?Assume COGS (Cost of goods sold) increases by 20% and Months of inventory remain constant from 2009 to 2010.

Using information in Exhibit 1 in the case, fill in the table below and calculate the increase in the value of the average inventory to meet the sales forecast.

Exhibit 1 Select Income Statement and Balance Sheet Values ($MM) Income Statement Accounts 2003 2009 Net sales 65.0 86.3 Expenses Cost of goods sold 29.0 38.9 Sales, general and administrative 10.1 14.0 Research and development 13.5 17.0 Depreciation 2.9 3.1 Other expenses 0.6 1.0 Operating expenses 56.1 74.0 Interest expense 2.4 3.0 Taxes 2.0 2.9 4.5 6.5 Net earnings Balance Sheet Accounts 2008 2009 Assets Cash 3.2 3.4 Receivables 3.0 4.0 Inventory 4.9 8.7 Prepaid expenses 4.8 6.1 Current assets 15.9 .2 Plant property and equipment 28.5 32.9 Other long term assets 2.7 4.3 Total long term assets 31.2 37.2 Total assets 47.1 59,4 Liabilities 8: Equity Short term debt 2.7 3.2 Accounts payable 2.3 3.0 Accrued liabilities 0.4 0.5 Current liabilities 5.4 6.7 Long term debt 17.2 21.7 Owners equity 24.5 31.0 Total capitalization 41.7 52.7 Total liabilities & equity 47.1 59,4 Months of inventory 2.028 2.690 Cost of goods sold / sales 0.446 0.451 0 412 0 412 2009 2010 Net Sales 86.3 103.56 COGS 38.9 Months of Inventory Value of the Average Inventory ($)