groups (Exhibit 1). The cutoff figures for the classic CASE 19 Developing an Assortment Plan for Hughes home furnishings division will be based on last year's sales history (Exhibit 1). It has been projected that a 15 percent increase over last year's sales volume can be attained due to Oriental rugs' continued popularity. This year's open-to-buy for fall/winter will be $60,200. EXHIBITI Previous Year's Fall/Winter Sales Results for Oriental Rugs A well-established, medium-size department store in the Midwest, Hughe's satisfies consumers' needs by featuring popular names in fashion for the individual consumer, fam- ily, and home. It tries to offer a distinctive, wide assortment of quality merchandise with personalized customer service. The customer services include personal shoppers, credit through in-house charge, American Express, and Visa; and an interior design studio. Hughe's pricing policy permits it to draw customers from several income brackets. Moderate- income consumers seeking value and fashion-predictable soft goods are target customers, as are upscale customers with a special interest in fashion. The department store is implementing new marketing strategies to prepare for continuing growth and expan- sion. Hughe's merchandising philosophy is to attract the discerning middle-market customers who make up 70 percent of the population as well as sophisticated, fashion- conscious consumers who expect to buy high-quality, brand-name merchandise at competitive prices. One portion of Hughe's buying staff is responsible for the Oriental rug department within home furnishings. The open-to-buy figure for this classification within the Sales Volume Markup $120,000 51.5% Size Percentage of Sales Fabrication Percentage of Sales 20% 15% 3 x 5' 4 x 6 6' X 9' 8' x 10 9' X 12 Silk Cotton Wool 60 15 10 15 Cases SECTION 563 EXHIBIT 2 Ghuman's Wholesale Price List The buying staff will be making its purchases for fall winter in Amritsar, India, a city known for top-quality carpets. Ghuman Export Private, Ltd., of Amritsar, Pun- jab, India, is the manufacturer the buyers will contact. Ex- hibit 2 shows information about Ghuman to use in the decision-making process. FABRICATION Size Silk Wool Cotton 3 x 5' $ 400 $ 250 4 x 6 700 500 $200 6 x 9' 850 700 275 8 x 10 1,200 1.000 350 9 x 12 1,400 1,300 500 Colors: Background colors available are navy, burgundy, black, and cream. Quantities required for purchase: No minimum orders required. Payment plan: Payment can be made in American dollars or Indian rupees. Letter of credit needs to be established prior to market trip. Delivery: Air freight-10 to 14 days delivery time; cost is usually 25 percent of total order. Ocean freight-39 days plus inland time is necessary; cost is usually 8-10 percent of total order. Customer loyally: Loyalty to customers is exceptional Damaged shipments can be returned. Ghuman's philosophy is to help the retailers obtain a profit on their product lines. DISCUSSION QUESTIONS 1. Work up a buying plan to use when purchasing merchandise from Ghuman's 2. How should Hughe's distribute the allotted open- to-buy dollars among the available sizes, colors, and fabrics? 3. Because it is dealing with an overseas manufacturer, how should Hughe's address additional costs, such as duties and shipping, that need to be covered by the allocated open-to-buy dollars? This case was prepared by Ann Fairhurst, Indiana University. CASE 20 Preparing a Merchandise Budget Plan or chain headquartered tions average about of total net sales. The nant for markdowns. groups (Exhibit 1). The cutoff figures for the classic CASE 19 Developing an Assortment Plan for Hughes home furnishings division will be based on last year's sales history (Exhibit 1). It has been projected that a 15 percent increase over last year's sales volume can be attained due to Oriental rugs' continued popularity. This year's open-to-buy for fall/winter will be $60,200. EXHIBITI Previous Year's Fall/Winter Sales Results for Oriental Rugs A well-established, medium-size department store in the Midwest, Hughe's satisfies consumers' needs by featuring popular names in fashion for the individual consumer, fam- ily, and home. It tries to offer a distinctive, wide assortment of quality merchandise with personalized customer service. The customer services include personal shoppers, credit through in-house charge, American Express, and Visa; and an interior design studio. Hughe's pricing policy permits it to draw customers from several income brackets. Moderate- income consumers seeking value and fashion-predictable soft goods are target customers, as are upscale customers with a special interest in fashion. The department store is implementing new marketing strategies to prepare for continuing growth and expan- sion. Hughe's merchandising philosophy is to attract the discerning middle-market customers who make up 70 percent of the population as well as sophisticated, fashion- conscious consumers who expect to buy high-quality, brand-name merchandise at competitive prices. One portion of Hughe's buying staff is responsible for the Oriental rug department within home furnishings. The open-to-buy figure for this classification within the Sales Volume Markup $120,000 51.5% Size Percentage of Sales Fabrication Percentage of Sales 20% 15% 3 x 5' 4 x 6 6' X 9' 8' x 10 9' X 12 Silk Cotton Wool 60 15 10 15 Cases SECTION 563 EXHIBIT 2 Ghuman's Wholesale Price List The buying staff will be making its purchases for fall winter in Amritsar, India, a city known for top-quality carpets. Ghuman Export Private, Ltd., of Amritsar, Pun- jab, India, is the manufacturer the buyers will contact. Ex- hibit 2 shows information about Ghuman to use in the decision-making process. FABRICATION Size Silk Wool Cotton 3 x 5' $ 400 $ 250 4 x 6 700 500 $200 6 x 9' 850 700 275 8 x 10 1,200 1.000 350 9 x 12 1,400 1,300 500 Colors: Background colors available are navy, burgundy, black, and cream. Quantities required for purchase: No minimum orders required. Payment plan: Payment can be made in American dollars or Indian rupees. Letter of credit needs to be established prior to market trip. Delivery: Air freight-10 to 14 days delivery time; cost is usually 25 percent of total order. Ocean freight-39 days plus inland time is necessary; cost is usually 8-10 percent of total order. Customer loyally: Loyalty to customers is exceptional Damaged shipments can be returned. Ghuman's philosophy is to help the retailers obtain a profit on their product lines. DISCUSSION QUESTIONS 1. Work up a buying plan to use when purchasing merchandise from Ghuman's 2. How should Hughe's distribute the allotted open- to-buy dollars among the available sizes, colors, and fabrics? 3. Because it is dealing with an overseas manufacturer, how should Hughe's address additional costs, such as duties and shipping, that need to be covered by the allocated open-to-buy dollars? This case was prepared by Ann Fairhurst, Indiana University. CASE 20 Preparing a Merchandise Budget Plan or chain headquartered tions average about of total net sales. The nant for markdowns