It is November 1, and you and your manager are reviewing sales compared to the six-month plan for your department. The sales so far are concerningthe original forecast of a 6% increase now seems like it was too optimistic. Actual sales are coming in below plan. Your manager says the following: We dont know if this sales trend will continue. For all we know, sales may pick up as the holiday season gets into full swing. But if this downward rend continues, we are going to need to take some action. If all orders come in as planned for November, December, and January and sales stay on this downward trend, then the department will be over inventoried at the end of the season and we will miss our sales and turnover plan. If more markdowns are taken to drive sales, it will affect the gross margin, but we might get back on inventory plan and hopefully achieve our sales plan. What do you think? Should we try to decrease planned purchases, or should we try to increase markdowns? Prepare a memo of no more than one page that outlines your recommendation. Keep in mind that in a business memo, the recommendation comes firstit should be the first sentence of the memo. Then what follows is your rationale for why that recommendation is best.

As you prepare the memo, consider these two things: 1) What happens if sales do improve going forward? Is one course of action better than the other if it turns out that sales dont keep decreasing? 2) Does your answer depend on what kind of business this is? Would a fashion apparel retailer like Urban Outfitters take the same approach as a drugstore like CVS? There is not a right or wrong answer hereboth of these options are valid. The best answers will be the ones that are realistic about the effects of the option thats recommended, and provide a solid rationale.

FALL SALES $ SEASON TOT. LAST YEAR PLAN ACTUAL Sales Markup \% Markdown \% Average Stock Turnover