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.

The data for this analysis is provided in the exhibits in the case and also in the worksheet supplement for the Scientific Glass case in the HBS course-pack.

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. (Hint: refer to the solved inventory problems document for additional examples)

Using information in Exhibit 1, fill in the table below and calculate the increase in the value of the average inventory to meet the sales forecast. (0.5 point)

	2009	2010
Net Sales	86.3	103.56
COGS	38.9
Months of Inventory
Value of the Average Inventory ($)

Details below:

Exhibit 1: Select Income Statement and Balance Sheet Values ($MM)
Income Statement Accounts	2008	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
Net earnings	4.5	6.5
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	22.2
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 & 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
Long term debt / total capital	0.412	0.412