You are an analyst working on a profitability report for BCC (Budget Clothing Company). You are responsible for evaluating how various factors will impact the company's profitability. Volume and sales prices have been stable at BCC for the past five years. The budget clothing industry is highly competitive and there is minimal flexibility to increase prices in response to changing economic conditions.

For each of the company's factors, determine whether the factor causes an increase, decrease or no change in profitability. Elaborate and explain your response.

Company factors

1. Polyester is one of the main raw materials used in the production of budget clothing items. There are a limited number of vendors that can supply polyester to BCC.
2. Historically, BCC has high fixed costs relating to selling and administrative expenses.
3. BCC tries to keep a two-week supply of raw material inventory on hand. The price of the raw materials does not decline, regardless of volume. The lead time to order and receive additional inventory is 1-2 days.
4. BCC has invested in its research and development efforts which resulted in changes to manufacturing equipment that will increase outputs by 25%. There were no major costs associated with adjusting the manufacturing equipment.
5. BCC is ranked as the number one company for the best customer service and fastest customer response times.
6. BCC recently replaced ten hourly assembly line workers with automated equipment that was placed in service a year ago. Before this change, each piece of clothing required an hour of human assembly labor.