Overview of Sports Unlimited

Sports Unlimited manufactures custom uniforms $($jerseys$,$ shorts, socks and jackets$)$ and supplies local teams each season. Recently, Sports Unlimited has experienced a decrease in available cash and an increase in inventory. Sales have been increasing at a faster rate than$-$expenses, which has generated an increase in profits. The industry has seen an increase in the number of companies, especially from overseas, which has created a need to compete on price. However, customers in this market are willing to pay a higher price for goods that are durable and of high quality. The internet is becoming an increasingly important sales channel and source of competition at the same time.

The company manufactures three main products: custom soccer jerseys $($tops$),$ custom soccer shorts and soccer socks. These three items are packaged together and sold as a soccer kit.

Perform Active $-$ part of the supply chain of Sports Unlimited

Sports Unlimited is part of a supply chain whereby they source fabrics and other raw materials from their suppliers, and they in turn also use retail outlets such as 'Perform Active' to take customer orders and supply custom soccer uniforms to players.

Samuel Martin, senior sales director at Perform Active was reviewing the latest corporate income statement prior to meeting with the company's chief financial officer. "I don't understand these numbers", Samuel thought. $"$We fell short of our projected sales volume of soccer kits by $16\%,$ so I was anticipating net income to be $16\%$ lower than expected as well. But that's not what the numbers are showing. How can I use this information to help me plan for the upcoming year?"

For simplicity, assume that the only product Perform Active sells is soccer kits. Perform Active buys each kit from Sports Unlimited for $$14\mathrm{.}80$ and sells it for $$20.$ Perform Active pays a small salary and $6\%$ commission to sales staff.