Calculate Gross Profit, COGS Margin, Operating Profit, Net Profit for PLAN [A] and Plan [B] given the case for COMPANY ABC.

monthly demand follows a normal distribution with mean of 1,000 units and standard deviation of 250 units.

- December, where demand randomly falls between 1,500 2,500 units, is an exception.

- alpha = 95%

- The lead-time when Company ABC places an order with its Asian supplier, until the product arrives at the DC, is 8 weeks. Orders are shipped to individual customers using the services of Speedy Post.

PLAN [A]

Software package that helps you predict monthly demand with the following accuracy:

within 120 units, 8 weeks at a time.

PLAN [B]

Switch from ocean transport to air-shipping in LD6 containers (which can hold up to 250 units). This will reduce the order-to-delivery lead-time from 8 weeks down to 2 weeks.

- It takes one week for the supplier to process the order and to make it available for pick-up/shipping. (Hint: the transfer of ownership takes place 1 week after the order has been placed.) - The cost of shipping by ocean is $200 per unit. The cost of shipping by air is $400 per unit.

- Assumed inventory holding cost per year: $750

	Base
	$
Sales	1,028.0
Cost of Sales	621.0
Gross Profit	407.0
Operating Expenses (incl SG&A)	340.0
Operating Profit	67.0
Interest Expense	0.0
Other Income	0.0
Pre-Tax Profit	67.0
Taxes (25%)	16.8
Net Profit	50.3

	Base
Assets	$
Cash	123.0
Other Current	53.0
Accounts Receivable	156.0
Inventories	60.0
Short Term Investment	0.0
Total Current Assets	392.0
Net Fixed Assets	206.0
Other Assets	157.0
Total Assets	755.0
Total Liabilities and Equity
Other Current Liabilities	71.0
Accounts Payable	31.0
Accrued Expenses	0.0
Total Current Liab.	102.0
Long-Term Debt	0.0
Total Liabilities	102.0